Oct 28 (Reuters) - Chinese private equity firm Boyu

Capital has emerged as the frontrunner to buy a controlling

stake in Starbucks' ( SBUX ) China business in a deal that could

value the unit at more than $4 billion, Bloomberg News said on

Tuesday.

Boyu stayed on in the bidding process after its final

contender Carlyle Group ( CG ) has dropped out, a person with

knowledge of the situation told Reuters.

Senior partners of the two firms flew to the United States

for final negotiations with the Seattle-based coffee chain

operator, said the person and two other people with knowledge of

the matter.

Starbucks ( SBUX ) is likely to retain a significant minority stake

in the China business after the sale, the sources said, who all

sought anonymity as the information was confidential.

"We've had very strong interest from multiple, high-quality

partners all of whom share our confidence in the long-term

growth potential of Starbucks ( SBUX ) in China," Starbucks ( SBUX ) said in a

response to Reuters.

The company is evaluating bids from five bidders, it added

but declined further comment.

Boyu did not respond to Reuters requests for

comment. Carlyle declined to comment.

Bidders who submitted binding offers, which also included

HongShan Group, FountainVest and Primavera Capital Group, valued

Starbucks China at around $4 billion, or about 10 times over its

core earnings, sources have said.

Primavera declined to comment while HongShan and

FountainVest did not immediately respond to a Reuters request

for comment.

Starbucks ( SBUX ) CEO Brian Niccol told CNBC this month the expected

valuation of the China business would be north of $10 billion,

including upfront investment by a potential partner, Starbucks' ( SBUX )

retained stake in the China business, and future royalty

payments.

The Bloomberg report said other parties, including internet

companies, could join the talks as limited partners to help

co-finance a deal.

Starbucks ( SBUX ) is divesting in China as fierce competition from

domestic coffee chains has clawed into its market share, by

offering cheaper products during an economic slowdown that has

changed consumer habits.

The chain has countered such challenges with steps such as

lower prices for select non-coffee beverages in China and

stepping up the addition of new, localised products.

Comparable-store sales in China rose 2% in the quarter that

ended on June 29, following a quarter that showed no growth.

Starbucks ( SBUX ) is set to report earnings for the fourth quarter

and the 2025 fiscal year on Oct 29.