Starbucks to sell control of China ops to Boyu Capital in $5b deal

Starbucks said on Nov 3 it would sell control of its China operations to investment firm Boyu Capital in a deal valued at US$4 billion (S$5.2 billion), in one of the most valuable divestments of a China unit by a global consumer company in recent years.

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Under the agreement, the companies will operate a joint venture, with Boyu holding an interest of up to 60 per cent in Starbucks’ retail operations in China.

Starbucks will retain a 40 per cent interest in the joint venture and will continue to own and license the brand and intellectual property to the new entity, the companies said.

The Seattle-based company’s market share in China has declined in recent years due to fierce competition from local chains - including Luckin and Cotti - that offer cheaper products. Starbucks has grappled with remaining competitive without dropping its own prices as an economic slowdown in China makes consumers more price sensitive.

Starbucks said it expects that proceeds from the sale, combined with Starbucks’ retained stake and licensing over the next 10 years, will total more than US$13 billion.