Apollo targets stake in AlShaya’s Starbucks

Apollo Global Management Inc., a U.S. private equity firm, is negotiating to acquire a minority stake in the Starbucks franchise for the Middle East, North Africa, and central Asia operated by the Kuwait-based AlShaya Group, Reuters reported on Thursday, according to three sources familiar with the situation.

Under the codename Project Emerald, the privately owned retailer plans to sell approximately 30 per cent of its minority stake in the business, as previously reported by Reuters, two sources confirmed.

Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), remains in discussions to buy the stake, having been shortlisted previously, according to two sources.

The Starbucks division, which operates about 2,000 stores in 13 countries across the Middle East, North Africa, Kazakhstan, and Azerbaijan, had a valuation of $4 billion to $5 billion in 2022 before it withdrew from Russia. 

Starbucks reported in January that Gaza crisis negatively affected its business in the region, causing it to miss first-quarter market expectations.

The company noted that the crisis significantly impacted sales, both in the Middle East and the U.S., as some customers initiated protests and boycotts, urging Starbucks to position itself on the issue. Despite these challenges, Starbucks affirmed its commitment to its international growth goals.

Starbucks clarified in October, following boycotts, that it is a non-political entity and denied rumours of supporting the Israeli government or military.

A potential deal could expand the investor pool of the privately held Alshaya family business, established in 1999.