Apollo Global in Talks to Acquire Minority Stake in Starbucks Franchise

Apollo Global Management Inc, a U.S. private equity firm, is reportedly in discussions to acquire a minority stake in the Starbucks franchise operated by AlShaya Group in the Middle East, North Africa (MENA), and Central Asia. 

According to sources familiar with the matter, the potential deal, known as “Project Emerald,” aims to sell approximately 30% of the privately owned retailer.

PIF Continues Engagement in Talks Alongside Apollo Global Management:

Sources indicate that the Public Investment Fund (PIF) of Saudi Arabia, which was previously shortlisted as a potential buyer for the stake, remains engaged in the negotiations. 

The Starbucks unit, which operates around 2,000 outlets across 13 countries in the specified regions, was valued between $4 billion and $5 billion in 2022. The valuation was made before its exit from the Russian market.

Impact of Regional Conflicts and Business Strategy:

Starbucks disclosed in January that regional conflicts, such as the Israel-Hamas war, had adversely affected its business in the MENA region. 

The company reported a significant sales impact due to consumer protests and boycott campaigns, prompting it to reiterate its commitment to growth ambitions in the international segment. 

Starbucks clarified its stance as a non-political organization and refuted rumors of support for the Israeli government or army.

Strategic Investment Opportunity for AlShaya Group:

For the AlShaya family, the potential deal presents an opportunity to widen the investor base of their privately owned business, which has held since 1999. 

The move aligns with the trend among major private companies in the Middle East, seeking outside investors through listings or strategic stake sales. 

AlShaya Group, established in 1890, is a prominent retail operator in the region, holding rights to popular Western brands like The Cheesecake Factory, Shake Shack, and Pottery Barn.

Recent Developments and Business Context:

In response to global events, AlShaya Group withdrew from the Russian market in 2022, closing 130 stores in compliance with Starbucks’ decision following the conflict with Ukraine. 

This move underscores the company’s commitment to ethical business practices amidst geopolitical challenges.