As local competition intensifies and traditional operating models lose effectiveness, Western food and beverage giants are increasingly turning to Chinese private equity firms for investment. Brands like Starbucks (SBUX.US) and Burger King (QSR.US) are opting to sell majority stakes in their China operations, handing control to local partners while retaining brand ownership and franchise-related economic benefits.
Starbucks has agreed to sell a 60% stake in its China business to Boyu Capital, valuing the unit at $4 billion. Meanwhile, CPE Capital is investing $350 million to acquire an 83% stake in Burger King China. Both deals await regulatory approval and are expected to close next year.
Other multinationals are following suit. IDG Capital recently acquired Yoplait's China operations, while reports suggest General Mills (GIS.US) and Oatly (OTLY.US) are also considering partial divestitures.
This shift reflects China's rapidly evolving consumer landscape. Local private equity firms, known for their "China speed," excel at menu localization, pricing adjustments, lower-tier city expansion, and adapting to digital-first consumer behavior. Domestic brands like Luckin Coffee have outperformed foreign rivals, while global coffee chains face declining store efficiency and heightened price competition.
Beyond capital, Chinese PE firms bring operational expertise, strong local networks, and willingness to overhaul management strategies. Many deals allow foreign companies to retain minority stakes and intellectual property, securing long-term royalty income while delegating daily operations to local investors.
Amid slowing deal activity, these subsidiaries have become attractive targets for PE firms seeking stable, cash-generating assets. Strong brand value, predictable cash flows, and clear exit paths—whether through resale or IPO—enhance their appeal.
The resurgence of carve-out deals this year highlights this trend, as multinationals reassess their China presence amid geopolitical uncertainty, softening consumer demand, and shareholder pressure to refocus on core markets.
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