According to five sources familiar with the matter, global investment giants Carlyle Group LP and EQT, along with regional players HongShan Capital Group (HSG) and Boyu Capital, are preparing to submit final bids for control of Starbucks' China operations. These sources indicate that final offers for Starbucks China are expected to be announced in early October, as Starbucks moves forward with selling control of its Chinese business.
Three of the sources revealed that Starbucks has requested binding offers to be submitted in early October. One source added that an agreement could be reached as early as the end of next month. Previous reports indicated that Starbucks had invited approximately 10 potential buyers to submit non-binding bids in early September, with most valuations for the China market business reaching up to $5 billion.
Two sources confirmed that Starbucks has recently decided to sell controlling interest in its China operations, though the specific equity stake has not been disclosed. The final round of bidders also includes Chinese private equity firm Primavera Capital, which may form an acquisition consortium with one of the four main competing parties.
Sources indicate that the Seattle-based global coffee giant is seeking to retain control of its coffee roasting facilities within the world's second-largest economy, with one source noting this is for quality control considerations. Transaction structure terms, including the proposed equity stake size, remain negotiable. Starbucks has stated it will maintain a meaningful ownership stake in its China operations.
Starbucks declined to comment on the ongoing sale process, as did EQT and Boyu Capital. Carlyle Group LP, Primavera Capital, and HSG all declined to comment. Goldman Sachs, serving as advisor for the sale, also declined to comment.
This divestiture comes as Starbucks faces significant market share decline in China, where over one-fifth of its global stores are located, due to intensifying local competition. According to Euromonitor International data, its market share dropped substantially from 34% in 2019 to 14% last year.
To address these challenges, the global coffee chain has implemented measures including price reductions on certain non-coffee beverages in the Chinese market and accelerated introduction of new localized products. For the quarter ended June 29, Starbucks China surprisingly achieved 2% same-store sales growth, compared to zero growth in the previous quarter.
**Niccol Strives for Comprehensive Starbucks Performance Turnaround**
Facing multiple pressures including rising coffee bean prices and potential Trump administration tariff policies, Starbucks under CEO Brian Niccol's leadership is working to reverse six consecutive quarters of significant same-store sales declines. Beyond making Starbucks cafes more attractive to consumers, the newly appointed CEO is continuously updating the menu, increasing store staffing, and implementing key technologies to streamline the ordering process.
Operationally, Niccol has implemented a series of major personnel changes, from tightening barista dress code standards to eliminating approximately 1,100 corporate positions and requiring some employees to relocate to Seattle. Starbucks has also granted stock awards with target values of $6 million to select executives, with these larger rewards expected to vest as they accelerate comprehensive business transformation while controlling costs.
Under Niccol's leadership, Starbucks is currently taking various proactive measures to boost sales, including the return of Pumpkin Spice Latte, store renovations, and mobile app and ordering system upgrades to improve customer experience. The company is also implementing the "Green Apron Service" model, aimed at achieving consistent and repeatable standards for store transaction processes, sales, and customer service times. Starbucks reports that stores implementing this model have shown improvements in transaction volume, sales, and customer service times.
From a valuation perspective, Starbucks is not trading cheaply, with an expected price-to-earnings ratio of approximately 32 times based on analyst forecasts for fiscal 2026 (ending September 2026). Analysts believe the company is achieving a turnaround, and this process is progressing. However, considering the substantial costs required for this turnaround and the stock's valuation level, some Wall Street institutions advise investor caution.
Citigroup lowered its target price for Starbucks from $100 to $99 in a research report to investors, maintaining a cautious "neutral" rating.