In a significant corporate maneuver, Carlyle Group and Boyu Capital have emerged as the leading candidates to acquire a majority stake in Starbucks' China business. This move comes as the iconic U.S. coffee chain seeks a local partner to better navigate the increasingly competitive landscape marked by rivals such as Luckin Coffee. According to a report by the Financial Times, the full valuation of Starbucks' China operations is projected to be around $4 billion, excluding ongoing negotiations regarding royalties.
Starbucks has received a total of five binding offers and is expected to make a decision on the preferred bidder by the end of the month, though the timeline remains tentative. Notably, the structure of the deal may involve a consortium, allowing Starbucks to retain up to 49% of its Chinese operations. Other private equity firms in contention include HongShan Capital, Primavera Capital, and FountainVest, indicating a robust interest in the valuable China market.
The strategic rationale behind this transaction is multifaceted. Starbucks has been under pressure to adapt its pricing strategies due to competition from local players, prompting price reductions on certain drinks earlier this year. However, recent reports indicate that Starbucks’ China business has stabilized, with three consecutive quarters of revenue growth reported as of mid-2025. Carlyle's previous experience in the successful 2017 majority buyout of McDonald’s China could bolster its bid, while Boyu Capital's established relationships with Chinese partners and supply-chain expertise may provide a competitive edge.
Starbucks CEO Brian Niccol has underscored that the motivation behind this transaction extends beyond capital infusion; it is fundamentally about operational partnership. The new owner will play a crucial role in expanding the Starbucks brand across China, enhancing its market positioning.
If the deal progresses as anticipated, the total financial implications could exceed $10 billion when factoring in Starbucks’ retained stake and royalties. As for next steps, stakeholders are closely monitoring the situation, with regulatory considerations likely to include antitrust reviews typical in such high-profile acquisitions.
With these developments, the potential market impact could resonate across various fronts, affecting shareholders, employees, and the broader coffee industry landscape. As Starbucks pursues this strategic partnership, the outcomes could redefine its growth trajectory in one of the world's largest consumer markets.