Hillhouse Capital Leads Bid for Starbucks China, Valuation Potentially Exceeding $5 Billion

CNBC AI News – June 23rd: Whispers are swirling that Hillhouse Capital, the investment powerhouse, is leading a charge to potentially acquire Starbucks’ China operations. Sources familiar with the matter indicate that a management roadshow, a crucial step in any buy-out, has recently concluded, drawing interest from the likes of Carlyle Group and Boyu Capital, underscoring the high stakes involved.

Goldman Sachs, acting as the exclusive financial advisor, has reportedly put the valuation range for Starbucks China between $5 billion and $6 billion (approximately 35.8 to 43 billion yuan). The entire transaction, if it proceeds, is anticipated to extend until 2026.

This isn’t the first tremor of possible change. Earlier in 2024, market reports hinted at Starbucks China seeking strategic investors. At the time, the company only confirmed they were open to exploring development avenues, including collaborations.

The latest financial figures reveal Starbucks China generated $3 billion in net revenue in 2024 and boast a network of 7,685 stores. However, growth is showing signs of strain, with a 35% plunge in net profit during the first half of 2025, and revenue increasing by a mere 0.95%.

A shifting market dynamic is undeniably driving this potential deal. The landscape has been disrupted by burgeoning local players, such as Luckin Coffee and Mixue Bingcheng, who have leveraged competitive pricing and aggressive expansion strategies to gain serious traction.

Starbucks is responding by focusing on penetrating the lower-tier cities and rural markets. In fiscal year 2024, half of the new store additions were situated in third-tier cities and below. In the fourth quarter, the firm pushed into 78 new county-level markets, adding 290 new stores.

Industry analysts suggest this potential acquisition signals a period of profound transformation within the Chinese coffee market. The rise of domestic brands fundamentally reshapes the competitive landscape, essentially forcing international giants to utilize creative strategies to defend their market hold through strategic capital arrangements and localization tactics.