Starbucks sells 60% stake in China unit to Boyu Capital for $4 billion

Starbucks Corp. agreed to sell a majority stake in its China business to private equity firm Boyu Capital for $4 billion in a bid to improve the coffee chain’s fortunes in the country.

Boyu Capital will hold up to a 60% interest in Starbucks’ retail operations in China through a new joint venture with the coffee seller, the companies said in a statement. Starbucks will hold the remaining 40% interest and will continue to license the brand and intellectual property to the joint venture.

The agreement marks the end of a search for a partner to help chart Starbucks’ next chapter in China, where it has about 8,000 stores after opening its first outlet in Beijing in 1999. Bloomberg previously reported that Boyu had emerged as the front-runner, and that Starbucks was evaluating five bids from potential suitors.

“We see a path to grow from today’s 8,000 Starbucks coffeehouses to more than 20,000 over time,” Starbucks Chief Executive Officer Brian Niccol said in a blog post.

Starbucks expects the total value of its China retail business to exceed $13 billion, including the value of licenses, according to the statement.

The coffee seller’s shares rose 1.3% at 5:16 PM in after-hours trading in New York. The stock has declined about 11% this year, trailing a nearly 17% advance by the S&P 500 Index.Read about our editorial guidelines and ethics policy