The dust settled! Starbucks China officials announced to sell 60% equity!

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Early this morning, Starbucks officially announced that it had reached an agreement with Boyu Capital, China's leading alternative asset manager, to establish a joint venture in China to jointly operate its retail business in the China market.

According to the agreement, Boyu will hold up to 60% of the joint venture, while Starbucks will retain 40%, and will continue to be the owner and licensor of the Starbucks brand and intellectual property, licensing the newly established joint venture. Based on a corporate value of approximately US$4 billion (equivalent to approximately RMB 28.4 billion)(excluding cash and debt), Boyu will receive its corresponding equity.

Starbucks expects the total value of its retail business in China to exceed US$13 billion. The total value consists of three parts: the proceeds from the transfer of the controlling interest in the joint venture to Boyu, the value of Starbucks 'retained interest in the joint venture, and the authorized operating income that continues to be paid to Starbucks over the next ten years or longer.

Regarding the coffee giant Starbucks's sale of China, there have actually been rumors since November last year, but it was not until May this year that "people familiar with the matter" said that Starbucks had officially launched the process of selling part of its equity in China business.

During this period, potential buyers have also emerged one after another. In addition to Boyu, Hillhouse Capital, Carlyle, China Resources Holdings, Ruixing's largest shareholder Dazheng Capital, Tencent, JD. com, Meituan, etc. have all appeared on the list of buyers circulated in the market., attracting special attention from all walks of life.

In reports in mid-October, Boyu and Carlyle became the main bidders for the majority stake in Starbucks 'China business. Among them, Carlyle, which held the 2017 case of the divestiture of McDonald's China business, was even more optimistic. At that time, the report also mentioned that Starbucks would eventually retain up to 49% of its China business, speculating that the bidders might form a consortium.

Now that the dust has settled, Boyu, who invested US$40 million in Mixue Ice City this year, has won a 60% stake in Starbucks China. This has finally put an end to Starbucks 'year-long sale of its China business, but it is also a new beginning for Starbucks China to return to joint ventures.

You know, when Starbucks entered the China market, it was restricted by policies at the time and adopted a franchise model, handing over store management rights to Beijing Meida (North China), Taiwan Uni-President (East China) and Hong Kong Meixin (South China) respectively. Due to policy changes, Starbucks gradually regained its operating rights in various places and achieved 100% direct sales in the the mainland of China market in 2017.

Returning from the direct-sales model to joint ventures again, Starbucks 'future direction in the China market will inevitably become the focus of attention after the equity sale. It is reported that in this strategic cooperation, the two parties will jointly enhance Starbucks 'customer experience in the China market, accelerate beverage and digital innovation, expand new urban and regional markets, and deepen emotional connection with customers through deeper localized integration.

The newly established joint venture will continue to be headquartered in Shanghai, managing and operating more than 8000 Starbucks stores currently spread across the China market. Both parties are committed to gradually expanding the size of Starbucks stores in China to 20000 in the future. In addition, it remains to be seen that Starbucks, which has returned to the joint venture model, will bring measures that suit the China coffee consumer market.

Picture from: Internet

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