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Final bids for Starbucks China due early October -sources

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Deal agreement to be reached by end-October -source

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Starbucks ( SBUX ) to sell control of China business - sources

By Kane Wu and Julie Zhu

HONG KONG, Sept 11 (Reuters) - Global investment firms

Carlyle Group ( CG ) and EQT, alongside regional players HongShan

Capital Group (HSG) and Boyu Capital, are preparing final

offers for a controlling stake in Starbucks' ( SBUX ) China operations,

said five people with knowledge of the matter.

Starbucks ( SBUX ) has asked them to submit binding bids by early

October, said three of the sources, who declined to be

identified as the information was private.

An agreement could be reached by the end of next month, one

of them added.

Starbucks ( SBUX ) had invited about 10 potential buyers to

submit non-binding bids by early September, with most offering

to value the China business at as much as $5 billion, Reuters

reported last month.

Starbucks ( SBUX ) has recently decided to sell control of its China

operations to the final buyer, said two of the sources. The size

of the stake has not yet been disclosed.

The final round of bidders also includes Chinese private

equity firm Primavera Capital, which is likely to team up with

one of the four primary bidders, said two of the sources.

The Seattle-based coffee giant is seeking to retain control

of its coffee bean roasting facility in the world's

second-largest economy, said two of the sources, with one adding

that was for quality control purposes.

Terms of the deal structure, including the size of the stake

being sold, remain negotiable, said one of the sources.

Starbucks ( SBUX ) has said that it would maintain a meaningful stake

in the China business.

The company did not immediately respond to comment regarding

the ongoing sale process, nor did EQT and Boyu.

Carlyle, Primavera and HSG, formerly known as Sequoia

China, all declined to comment.

Goldman Sachs, which is advising Starbucks ( SBUX ) on the sale,

declined to comment.

The sale comes as Starbucks ( SBUX ) faces declining market share in

China - home to more than a fifth of its cafes - due to

intensifying competition from local rivals.

Its market share fell sharply to 14% last year from 34% in

2019, according to Euromonitor International data.

To counter these challenges, the chain has since implemented

measures such as reducing prices for select non-coffee beverages

in China and accelerating the introduction of new, localised

products.

Comparable-store sales in China increased 2% in the quarter

ended on June 29, versus zero growth in the previous quarter.