Functional Brands closes $8 million private placement and completes Nasdaq listing
Investing.com - Starbucks (NASDAQ:SBUX) will sell a 60% controlling stake in its China business to Boyu Capital, according to Bernstein SocGen Group, which reiterated its Outperform rating and $100.00 price target on the coffee chain’s stock. This target represents significant upside potential from Starbucks’ current price of $80.96, which is trading near its 52-week low of $75.50.
The transaction values the total China business unlevered equity value at $4 billion, with Starbucks retaining a 40% stake while maintaining ownership and licensing of its brand and intellectual property in the region. For context, this China business valuation represents just a fraction of Starbucks’ overall market capitalization of $92.04 billion.
Bernstein views this move as a "value-creating refranchising event" that follows historical precedents set by companies like YUM and McDonald’s, where transitions to asset-light models have driven multiple expansion.
The total transaction value of $13 billion derives from three components: proceeds from the controlling interest sale, the value of Starbucks’ retained interest in the joint venture, and the net present value of ongoing licensing economics payable to Starbucks.
Bernstein believes the proceeds will fund U.S. turnaround initiatives and be distributed to shareholders via dividends, with potential share buybacks coming later after the U.S. transformation progresses. Starbucks has a strong dividend track record, having raised its dividend for 16 consecutive years with a current yield of 3.06% and dividend growth of 8.77% over the last twelve months. InvestingPro offers additional insights through its comprehensive Pro Research Report, available for Starbucks and 1,400+ other US equities, providing clear, actionable intelligence for smarter investing decisions.
In other recent news, Starbucks announced a significant joint venture with Boyu Capital, where Boyu will acquire a 60% stake in Starbucks’ China operations. This deal values the Chinese business at over $13 billion and will see Starbucks maintaining a 40% ownership while licensing its brand and intellectual property to the new entity. Additionally, Starbucks reported its fourth-quarter fiscal 2025 earnings, revealing earnings per share of $0.52, which fell short of the $0.56 consensus estimate. Despite this earnings miss, BMO Capital maintained its Outperform rating on Starbucks with a $115.00 price target, citing better-than-expected global comparable sales. Stifel also reiterated its Buy rating with a $105.00 price target following positive global comparable sales for the first time in seven quarters. These developments highlight Starbucks’ strategic moves and the mixed reactions from analysts regarding its recent financial performance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.