Starbucks China Operations: JD, Tencent, KKR Among Potential Investors To Submit Bids - Report

Starbucks has shortlisted a dozen firms, including private equity and technology companies, to bid for a potential investment or partnership for the coffee chain's China operations, Bloomberg News reported on Friday.

The report, which cited people familiar with the situation, named Boyu Capital, Carlyle Group, EQT AB, FountainVest Partners, KKR, Hillhouse Investment, and Primavera Capital, as well as Chinese tech giants JD.com (JD) and Tencent Holdings (TCEHY).

The shortlisted firms will be given access to the coffee chain's China financials, allowing them to evaluate and prepare bids in the coming months.

On Stocktwits, the retail sentiment for the company's shares was 'extremely bullish' as of the last reading. SBUX shares are down 2.3% year-to-date.

For months, Starbucks has been evaluating options for its China business, which include a partial or complete stake sale, as well as a financial and operational partnership with a local firm.

Some earlier reports valued the business at up to $10 billion, though analysts have called that figure overstated.

China is the second-largest market for the U.S. coffee chain. Still, Starbucks has recently lagged behind local chains like Luckin Coffee (LKNCY) and Cotti Coffee, which have boomed with much cheaper alternatives and frequent product launches. Starbucks has responded by lowering prices and offerings such as fruit teas and sugar-free options on its China menus.

The process comes amid significant weakness in the business and a company-wide turnaround effort. In recent years, inflation-weary consumers have shied away from Starbucks coffee and food, amid a broader trend of cutting back on dining out.

Since CEO Brian Niccol took over in September last year, Starbucks has been cutting costs, boosting staffing at U.S. stores, and refreshing its menu and cafe designs.

In the last quarter, Starbucks' global same-store sales dropped at a more-than-expected 2% rate, deaccelerating for the sixth straight quarter, although comparable sales rebounded in the Chinese market.

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