Carlyle and Boyu Capital have emerged as the leading contenders to acquire a majority stake in Starbucks’ China business, as the U.S. coffee group seeks a local partner to reinvigorate growth amid rising competition from domestic chains, according to the Financial Times.

Sources close to the deal said the sale could value Starbucks’ China operations at about $4bn, excluding royalties. Including its retained stake and future royalty income, the transaction’s total value to Starbucks could exceed $10bn.

Five private equity bidders submitted binding offers last week, with a decision expected by the end of the month. Other bidders include HongShan Capital Group, Primavera Capital, and FountainVest Partners. Starbucks may ultimately retain up to 49% of the business, with consortium bids still under consideration.

Carlyle’s track record in China, including its role in McDonald’s 2017 spinout of its Chinese operations, could position it favourably. However, Chinese private equity firms may also hold an edge due to their supply chain expertise and local market relationships.

Chief Executive Brian Niccol said the company’s focus is on finding a partner aligned with its “mission and values.” He added, “This is about how do we ensure that the Starbucks brand is in a much better place in the future, because I do believe there’s going to be thousands of more Starbucks in China.”

The sale comes as Starbucks faces mounting competition from lower-priced rivals such as Luckin Coffee, which now operates 26,000 stores across mainland China, more than triple Starbucks’ 7,828 locations. Despite these headwinds, Starbucks’ China business has shown signs of recovery, achieving three consecutive quarters of revenue growth.

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