Starbucks China valued at about US$5 billion by bidders, sources say

Most of the bidders seeking to buy a portion of Starbucks’ China operations have submitted offers valuing the business at as much as US$5 billion, said two people with knowledge of the discussions.

That would make a potential deal one of the most valuable China unit divestments by a global consumer company in recent years.

The offers, which have not been reported previously, would let Starbucks push ahead with the sale in a market where it faces sluggish growth and stiff competition from local brands. Starbucks invited around 10 potential buyers to submit non-binding bids by early September, Reuters reported last month.

Most of those bids set the value for Starbucks China at about 10 times its expected earnings before interest, taxes, depreciation and amortisation (Ebitda) of US$400 million to US$500 million in 2025, said the people.

At least one bidder offered an Ebitda multiple in the high teens, said one of the people.

The multiple that bidders offered for Starbucks China is similar to one of its main rivals, Luckin Coffee, which is currently valued at nine times its projected Ebitda for the next 12 months.