What Happened?

Shares of coffeehouse chain Starbucks (NASDAQ: SBUX) jumped 3.1% in the pre market session after the company received strong interest for a stake in its China business, with bids valuing the unit at up to $10 billion. The coffee giant is reportedly evaluating non-binding offers from nearly 30 private equity firms, including both international and domestic players like Centurium Capital, Hillhouse Capital, The Carlyle Group, and KKR & Co. This strategic review comes as Starbucks faces intense competition in the crucial Chinese market. 

While no final decision has been made, reports suggest Starbucks aims to retain a significant stake of around 30% in the unit, seeking a strategic partner to help navigate the competitive landscape and drive long-term growth. Investors are reacting positively to the news, as a potential deal at such a high valuation could unlock significant value for shareholders and validate the long-term potential the company sees in its China operations.

After the initial pop the shares cooled down to $95.11, up 0.2% from previous close.

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What Is The Market Telling Us

Starbucks’s shares are somewhat volatile and have had 11 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

Starbucks is up 3.2% since the beginning of the year, but at $95.11 per share, it is still trading 17.9% below its 52-week high of $115.81 from February 2025. Investors who bought $1,000 worth of Starbucks’s shares 5 years ago would now be looking at an investment worth $1,293.

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