Starbucks sells majority stake in China business for $4 billion

Starbucks said Monday it sold a majority stake in its China business to Boyu Capital in a deal that values the business at $4 billion.

Boyu will own a 60% stake in the business, with Starbucks holding the remainder. The coffee chain expects the total value of its China business to surpass $13 billion, including ongoing licensing agreements in the region along with its remaining stake in the unit.

“Boyu’s deep local knowledge and expertise will help accelerate our growth in China, especially as we expand into smaller cities and new region,” CEO Brian Niccol said in the release. “Together we will write the next chapter of Starbucks storied history in China.”

Currently, there are 8,011 locations in the region and the company still aims to have 20,000 locations there over time. Over 60% of Starbucks’ store base is in the US and China. The deal is expected to be finalized during Starbucks’ next fiscal quarter.

In its most recent quarter, global same-store sales at Starbucks rose 1%, a surprise increase against forecasts for a 0.5% decline and the first time in seven quarters the company posted positive global comp sales.

Same-store sales in China rose 2%, a shade less than the 2.2% expected.

Starbucks has deep roots in the region. It opened its first store in Beijing in 1999 and its first Shanghai store in 2000.

From the early 2000s to 2017, the coffee giant expanded with licensing agreements with joint venture partners as it looked to grow its presence in China, which at the time was a largely untapped market.

In 2017, Starbucks decided to bring its operations completely in-house when it bought the remaining 50% share of its East China business from joint venture partners for $1.3 billion.

This decision now marks a reversal in that course.

“Starbucks has built an iconic brand and a deep connection with Chinese consumers over the past 26 years…This partnership reflects our shared belief in the enduring strength of that brand and the opportunity to bring even greater innovation and local relevance to customers across China,” Boyu Capital Partner Alex Wong said in the release.

Starbucks stock was up about 0.5% following the announcement.

Brooke DiPalma is a reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.

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