Wall Street Circles Starbucks as China Deal Heats Up–Tech Giants and PE Titans in Bidding War

Starbucks (NASDAQ:SBUX) is quietly making moves in Chinaand Wall Street’s watching. The coffee giant has invited a dozen heavyweight investors, including Carlyle, KKR (NYSE:KKR), EQT, and tech majors JD.com (NASDAQ:JD) and Tencent (TCEHY), into the next phase of bidding for a stake in its China operations. According to people familiar with the matter, these shortlisted parties are now reviewing financials and preparing formal proposals. Starbucks CEO Brian Niccol emphasized this isn’t about raising capital. What this is about, he told analysts, is how do we ensure that the Starbucks brand is in a much better place in the future. Starbucks plans to retain a meaningful stake and is not looking to fully exit.

The stakes are high. China is Starbucks’ second-biggest marketbut it’s also one of the most competitive. Local rival Luckin Coffee has surged ahead with cheaper drinks, faster innovation, and aggressive expansion. To stay relevant, Starbucks has started adapting its menu with more affordable fruit teas and sugar-free options. And early signs suggest it’s working: same-store sales in China turned positive last quarter for the first time since late 2023. A local partner with tech and consumer insight could help Starbucks move faster, optimize supply chains, and deepen its mobile platform strategy in a market that increasingly rewards speed and price.

This process has drawn interest from over 20 potential backers, though only a dozen have made it to this second round. Starbucks isn’t seeking a full salebut it is exploring how to tap deeper into China’s fast-evolving consumer landscape. While no deal is guaranteed, more players could enter later stages as discussions evolve. With long-term ambitions to grow its China store count from roughly 7,800 to 20,000, the right strategic partner could be a pivotal lever for Starbucks’ next act in Asia.

This article first appeared on GuruFocus.