Starbucks said on Monday (November 3) that it would sell control of its operations in China to Boyu Capital in a deal that values the business at $4 billion - one of the largest divestments of a China unit by a global consumer company in recent years.
AI Brief
The Seattle-based coffee chain said the funds from investment firm Boyu will help it jump-start growth in the world's second-largest economy, where local rivals like Luckin and Cotti now offer lattes for 9.9 yuan (US$1.40) - less than a third of Starbucks' prices.
Under the deal, Boyu - whose founders include the grandson of former Chinese President Jiang Zemin - will hold up to 60% of a new joint venture. Starbucks will hold 40% and will continue to license the brand and intellectual property to the venture.
The U.S. firm said the value of the retail business in mainland China - including proceeds from the sale, the value of its retained stake and likely licensing income over at least the next 10 years - will total more than US$13 billion. Its shares climbed 3% in after-hours trading.
Starbucks has been credited with creating the market for coffee in China after entering in 1999. But its market share there has tumbled to 14% last year from 34% in 2019, according to data from Euromonitor International.
Your gateway to global news, insights, and stories that matter.
AI Brief
- Starbucks is teaming up with Boyu to grow in China, where cheaper local rivals are gaining ground.
- Boyu will hold 60% of the new joint venture while Starbucks retains 40% and licenses its brand.
- The deal values Starbucks' China retail business at over $13 billion, despite its shrinking market share.
The Seattle-based coffee chain said the funds from investment firm Boyu will help it jump-start growth in the world's second-largest economy, where local rivals like Luckin and Cotti now offer lattes for 9.9 yuan (US$1.40) - less than a third of Starbucks' prices.
Under the deal, Boyu - whose founders include the grandson of former Chinese President Jiang Zemin - will hold up to 60% of a new joint venture. Starbucks will hold 40% and will continue to license the brand and intellectual property to the venture.
The U.S. firm said the value of the retail business in mainland China - including proceeds from the sale, the value of its retained stake and likely licensing income over at least the next 10 years - will total more than US$13 billion. Its shares climbed 3% in after-hours trading.
Starbucks has been credited with creating the market for coffee in China after entering in 1999. But its market share there has tumbled to 14% last year from 34% in 2019, according to data from Euromonitor International.
Your gateway to global news, insights, and stories that matter.
