Starbucks' quarterly profits fell short of expectations, affected by a widespread boycott campaign in the Middle East (Reuters)
Reuters quoted sources it described as informed that the American direct investment company Apollo Global Management is in talks to buy a minority stake in the Starbucks franchise in the Middle East, North Africa and Central Asia, which is operated by the Kuwaiti Alshaya Group.
This comes as Starbucks said last January that the war between Israel and the Islamic Resistance Movement (Hamas) had damaged its business in the region, and that its quarterly results fell short of market expectations.
Reuters previously reported from two sources that Alshaya is looking to sell a minority stake of about 30% of this business.
One of them and a third source said that the Public Investment Fund, Saudi Arabia's sovereign wealth fund, which was previously shortlisted to buy this stake, was still engaged in talks.
The Starbucks unit operates about 2,000 outlets in 13 countries across the Middle East, North Africa, Kazakhstan and Azerbaijan.
Reuters previously reported that its value ranged between $4 and $5 billion in 2022, before exiting Russia.
The American cafe company said that sales were greatly affected in the Middle East and the United States, against the backdrop of the repercussions of the Gaza war, as some consumers launched protests and boycott campaigns to demand that the company take a position regarding Israel’s war on the Strip.
Starbucks' profits and revenues were below expectations in its first quarter ending at the end of last December. The company's fiscal year begins on the first of October of each year.
The company's revenues amounted to $9.43 billion in its first quarter, compared to $9.6 billion that was expected, but the recorded figure is an increase from the $8.7 billion recorded in the first quarter of the company's last fiscal year.
The number of global Starbucks branches increased by 5%, which is less than the Street Account market research estimate of 7.2%.
Following the boycott, Starbucks confirmed in October that it was a non-political organization and denied rumors that it provided support to the Israeli government or military.
The deal would expand the investor base in the business owned by the Alshaya family since 1999.
Some of the largest private companies in the Middle East are increasingly looking to attract external investors through listings or strategic share sales.
In 2022, Alshaya withdrew from Russia and closed 130 stores in compliance with Starbucks’ decision to withdraw from the country after it was subject to sanctions over its war with Ukraine.
Founded in 1890, Alshaya Group is one of the largest retail companies in the region and owns the rights to operate well-known Western brands including the Cheesecake Factory, Shake Shack and Pottery Barn.
Source: Al Jazeera + Reuters