Starbucks [NASDAQ:SBUX] is likely to officially launch a sale process for its China business in the second quarter of this year, said two sources familiar with the situation.

Goldman Sachs is the sellside financial advisor, said the first source.

The seller has been pre-marketing among interested investors, including major private equity firms and some strategic players, for the past few months and has been in preliminary discussions on valuations, said the second source.

The company is expecting an at least low-teens EBITDA multiple while some bidders are expecting a single-digit multiple, the source added.

Boyu Capital and Carlyle Group are among the interested PEs, said the two sources.

Starbucks, aiming to reach a deal by the end of this year, would likely prefer a franchisee deal with a strategic partner as part of a stake sale plan, which would value the China business at USD 1bn, as reported earlier.

KKR, Fountainvest Partners, and PAG are among potential buyers, as reported.

Meituan [HKG:3690] and China Resources Holdings have also been approached as potential bidders. The Seattle, Washington-based coffee shop chain has not yet determined the stake sale size. Executive Vice President and Chief Financial Officer Rachel Ruggeri is expected to be among senior company executives visiting China in the coming weeks to hold sales talks, the report added.

Starbucks’ China business recorded USD 3bn net revenues in the fiscal year ended September 29, 2024, according to its 2024 annual report. It has not revealed the China segment’s EBITDA number, however, the fiscal 2024 operating margin was 15% while that of the International segment, including China, Japan, Asia Pacific, Europe, the Middle East, Africa, Latin America, and the Caribbean, was 14.2%, as reported.

China is the company’s second-largest market overall and 100% company-operated, as reported. According to its 1Q25 results posted on 28 January 2025, the China business recorded USD 743.6m net revenue as of the end of 29 December 2024, with comparable store sales declining by 6%, driven by a 4% decline in average tickets and a 2% decline in comparable transactions. It has 7,685 stores in China.

The China business is dealing with challenges from sluggish economic growth and increased competition from local brands including Luckin Coffee [OTCPK:LKNCY] and a number of milk tea chain operators including Mixue Group [HKG:2097]. Luckin Coffee saw a 15% stock price rise year-to-date while Mixue set a new record for the Hong Kong stock market in its ongoing IPO yesterday, being oversubscribed by more than 5,125 times with an earnings multiple of 15.3x.

Starbucks, Starbucks China, and Boyu Capital did not reply to requests for comment. Goldman Sachs and Carlyle Group declined to comment.