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Starbucks’ (NASDAQ:SBUX) China business attracted bids valuing it at up to $10 billion as multiple investment firms, including Centurium Capital, Hillhouse Capital, Carlyle Group (CG), and KKR & Co. (KKR), compete to acquire a stake, according to a CNBC report that cites sources familiar with the matter.
Almost 30 domestic and foreign private equity firms in China are bidding, giving the business a valuation between $5 billion and $10 billion. Starbucks could retain a 30% stake, with the rest split among a group of buyers, each holding less than 30%, the report added.
The stake sale comes amid intensified competition and slower growth for the coffee chain in China, which is one of its largest international markets. Starbucks’ (NASDAQ:SBUX) market cap hovers around $106 billion, with China making 8% of global revenue; a fair valuation for the business would stand at around $9 billion, the source added.
“Any deal must make sense for Starbucks business and partners,” a company spokesperson told CNBC. “We see significant long-term potential in China and are evaluating the best ways to capture the future growth opportunities. We are looking for a strategic partner with like-minded values, who shares our vision to provide a premium coffeehouse experience. We remain committed to China and want to retain a meaningful stake in the business. Any deal must make sense for Starbucks business and partners.”
Goldman Sachs is the financial advisor on this deal.
The stock price traded marginally higher, up 0.38% to $95.30 on Tuesday during after-market hours of trading. YTD, the stock made gains of ~4%.