Done Deal: Starbucks closes $4 billion China joint venture; to expand footprint
Starbucks Coffee Company has finalized its joint venture with private investment firm Boyu Capital, selling control of its China operations, the coffee giant’s second-largest business.
Under the terms of the agreement, which was announced in November and has a value of about $4 billion, Boyu and Starbucks will operate a joint venture, with Boyu holding up to 60% interest and operating the approximately 8,000 Starbucks stores in China. Starbucks will retain a 40% interest in the joint venture and will continue to own and license the brand and intellectual property to the new entity.
Starbucks’ coffeehouses in China will transition to a licensed operating model, with a shared long-term plan to grow to as many as 20,000 locations over time.
Starbucks has been under increasing financial pressure in China. Rival Luckin Coffee, which opened its first U.S. locations in June, has gained market share with its lower prices and explosive growth. The company operates more than 20,000 stores across China.
"China remains one of the most exciting long-term opportunities for Starbucks, and finalizing this partnership with Boyu accelerates our ability to grow with intention and discipline,” said Brian Niccol, chairman and CEO, Starbucks. “By combining Starbucks trusted global brand with Boyu’s deep local expertise, we are positioning https://chainstoreage.com/starbucks-4b-deal-sell-60-its-china-operationsthe business to serve more customers, enter more cities, and strengthen our leadership in a dynamic and evolving market.”
Founded in 2011, Boyu Capital is described as a leading alternative investment firm with Chinese roots and a global mandate. It has more than 200 portfolio companies and offices in Hong Kong, Beijing, Shanghai and Singapore.
“With Boyu as our partner, we have an operating model designed to accelerate expansion, enhance profitability, and deliver the Starbucks experience to more communities across China,” said Brady Brewer, CEO of Starbucks International.
With the transaction now complete, Starbucks and Boyu will transition into the operational phase of the joint venture, focused on expansion, innovation and “delivering exceptional coffee and welcoming experiences to customers across China,” the company said.
“Starbucks has built an iconic brand and a deep connection with Chinese consumers,” said Alex Wong, partner at Boyu Capital. “We are proud to support Starbucks next chapter of growth in China and look forward to working together to expand the brand’s presence and relevance over the long term.”
