Starbucks China Unit Sale: Carlyle, EQT, Hongshan, Boyu Capital Reportedly Invited To Submit Final Bids

Starbucks has invited global private equity firms Carlyle Group and EQT Partners and Chinese firms HongShan Capital Group and Boyu Capital to submit their final offers for a controlling stake in the coffee chain's China business, Reuters reported on Thursday.

Shares climbed 0.3% in premarket trading.

The prospective investors will send in their bids by early next month and a deal could be formalized by the end of October, the report said, citing information from unnamed sources.

Reuters earlier reported that as many as 10 firms were negotiating offers, with most offering to value the China business at as much as $5 billion.

Although Starbucks is looking to offload a controlling stake, after initially considering a minority divestiture, the final stake remains negotiable, according to Thursday's report.

The sale comes as Starbucks faces declining market share in China, the company's second-largest market, due to intensifying competition from local rivals such as Luckin Coffee (LKNCY) and Cotti Coffee.

Meanwhile, Starbucks' global business also faces acute weakness even as the company attempts a turnaround under CEO Brian Niccol, who joined last year after helming Chipotle Mexican Grill.

Under Niccol, Starbucks has been cutting costs, boosting staffing at U.S. stores, and refreshing its menu and cafe designs.

On Stocktwits, the retail sentiment for SBUX was 'bearish' as of early Thursday. The company's shares are down 9.2% year-to-date.

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