Core Viewpoint - The era of foreign capital premium has ended, as evidenced by the significant acquisition of Starbucks China, marking a pivotal shift in the competitive landscape of the coffee market in China [2][4][17]. Group 1: Acquisition Details - The acquisition of Starbucks China by Boyu Capital for a valuation of $13 billion represents the largest merger in the consumer sector in nearly a decade, involving over 30 top investment institutions [5][6]. - The deal was structured with a $4 billion valuation for the joint venture, which includes assets such as stores and a roasting factory, while the brand value is tied to a royalty fee based on annual GMV [10][11]. - The final valuation corresponds to a price-to-earnings ratio of approximately 26 times, indicating that Starbucks China's valuation is comparable to that of Luckin Coffee [10]. Group 2: Strategic Implications - The primary concerns for both buyers and sellers revolve around the price and the strategy to turn around Starbucks China's performance [9]. - Boyu Capital plans to leverage its real estate resources to introduce high-quality properties for Starbucks, while other proposals include expanding the store count to 15,000, with a significant number in county-level cities [11]. - The competitive landscape has shifted, with Boyu Capital recognized as a professional and low-profile private equity firm, actively pursuing acquisitions in a challenging market [14][15]. Group 3: Market Dynamics - Starbucks China has faced increasing competition, particularly from Luckin Coffee, which has aggressively expanded its market presence and pricing strategy [20][41]. - The high-end positioning of Starbucks has become a liability, as it has failed to adapt to changing consumer preferences and the rise of affordable coffee options [38][39]. - The company's internal divisions regarding its high-end strategy have led to operational inefficiencies and a decline in profitability, with operating margins dropping from a peak of 28% to around 12-13% [55]. Group 4: Future Outlook - Following the acquisition, Starbucks aims to expand its store count significantly, with plans to reach 20,000 locations, particularly in smaller cities and emerging regions [71]. - The new leadership is expected to focus on cost reduction, pricing strategies, and a renewed expansion approach to regain market share [71][72]. - The transition to a new operational model post-acquisition will be critical for Starbucks to navigate the evolving competitive landscape in China [71].