By Kane Wu and Julie Zhu
HONG KONG (Reuters) – World funding corporations Carlyle Group and EQT, alongside regional gamers HongShan Capital Group and Boyu Capital, are getting ready ultimate presents for a controlling stake in Starbucks’ China operations, stated 5 individuals with information of the matter.
Starbucks has requested them to submit binding bids by early October, stated three of the sources, who declined to be recognized as the knowledge was non-public.
An settlement might be reached by the tip of subsequent month, considered one of them added.
Starbucks had invited about 10 potential consumers to submit non-binding bids by early September, with most providing to worth the China enterprise at as a lot as $5 billion, Reuters reported final month.
Starbucks has lately determined to promote management of its China operations to the ultimate purchaser, stated two of the sources. The scale of the stake has not but been disclosed.
The ultimate spherical of bidders additionally consists of Chinese language non-public fairness agency Primavera Capital, which is prone to group up with a co-investor, stated two of the sources.
The Seattle-based espresso group is in search of to retain management of its espresso bean roasting facility on this planet’s second-largest economic system, stated two of the sources, with one including that it was for high quality management functions.
Phrases of the deal construction, together with the scale of the stake being bought, stay negotiable, stated one of many sources.
Starbucks has stated that it might keep a significant stake within the China enterprise.
In response to a Reuters request for remark, a spokesperson for Starbucks referred to its newest quarterly earnings the place it had record-breaking gross sales progress in its worldwide enterprise and the third consecutive quarter of income progress in China.
The spokesperson declined to touch upon the continuing sale course of.
Carlyle, Primavera and HSG, previously often known as Sequoia China, all declined to remark. EQT and Boyu didn’t reply to a request for remark.
Goldman Sachs, which is advising Starbucks on the sale, declined to remark.
The sale comes as Starbucks faces declining market share in China – residence to greater than a fifth of its cafes – on account of intensifying competitors from native rivals.
Its market share fell sharply to 14% final 12 months from 34% in 2019, based on Euromonitor Worldwide knowledge.
To counter these challenges, the chain has since applied measures reminiscent of lowering costs for choose non-coffee drinks in China and accelerating the introduction of recent, localised merchandise.
Comparable-store gross sales in China elevated 2% within the quarter ended on June 29, versus zero progress within the earlier quarter.
(Reporting by Kane Wu and Julie Zhu; Enhancing by Kim Coghill and Jane Merriman)
