Starbucks' $1 Billion China Shake-Up? Major Deal Talks Brewing Behind the Scenes
Starbucks (NASDAQ:SBUX) is making quiet moves behind the scenesand they could reshape its future in China. The company has reached out to private equity firms, tech giants, and other strategic players to test interest in its China business, according to people familiar with the talks. While nothing's locked in, insiders say a partial stake sale is on the table, potentially valuing the business in the billions. Conversations are still early, but investors are expected to send in feedback soon. The company hasn't committed to any deal just yetbut when a global brand starts taking meetings like this, you know the playbook is shifting.
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This comes as Starbucks faces intense pressure in what used to be one of its brightest growth stories. China is still its second-largest market, but local champions like Luckin Coffee and Cotti Coffee are moving fastand grabbing wallets. Luckin raked in $1.2 billion in revenue last quarter, outpacing Starbucks' $740 million haul in the same region. With more than 7,750 stores across China and a 25% stock drop since February, Starbucks is under the gun to prove it still has room to runand that may require fresh capital, new partners, or both.
CEO Brian Niccol has hinted at long-term optimism, saying the company remains committed to China and sees plenty of runway ahead. He's also floated the idea of partnerships beforethough without much detail. If Starbucks pulls the trigger on a stake sale, it would be following a well-trodden path. McDonald's (NYSE:MCD) and Yum! Brands (NYSE:YUM) both spun off their China operations in years past to tap local expertise and consumer trends. Investors now have a front-row seat as Starbucks weighs whether it wants to go soloor team up to win in one of the toughest coffee battlegrounds on the planet.
This article first appeared on GuruFocus.
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