Reports indicate that Luckin Coffee is looking to acquire Blue Bottle, and % Arabica is also under consideration

Reports indicate that Luckin Coffee is considering acquiring Blue Bottle Coffee, a subsidiary of Nestlé, to enhance its brand image and expand into the high-end coffee market.

On December 16, Bloomberg cited informed sources stating that Luckin Coffee and its investor Centurium Capital are also evaluating other acquisition targets, including the operator of % Arabica's business in China, which is backed by private equity firm PAG.

According to reports, insiders mentioned that Luckin and Centurium Capital had previously considered Costa Coffee, a subsidiary of Coca-Cola, but it is unlikely that this deal will move forward.

The reports noted that discussions are still in the early stages and may not result in a final offer. This potential acquisition comes as Luckin Coffee is rapidly expanding, having surpassed Starbucks in the number of stores to become the largest coffee chain brand in China.

Luckin's Rapid Expansion Seeks Brand Upgrade

Founded in 2017, Luckin Coffee has achieved rapid growth by offering low-priced coffee and customized beverages such as Coconut Cloud Latte and Cheese Latte through thousands of stores.

In terms of store count, Luckin has surpassed Starbucks in China. In November, Wall Street Journal mentioned that Starbucks had decided to sell the majority stake in its China operations to Boyu Capital.

Financial data shows that Luckin has emerged from the shadow of its delisting from Nasdaq in 2020 due to a financial fraud scandal.

As of the September quarter, Luckin's net revenue reached $2.1 billion, a year-on-year increase of 50%, with a net profit of approximately $180 million. During this quarter, the company added 3,008 new stores, including five in Singapore, 21 in Malaysia, and three in the United States, bringing its total global store count to 29,214.

Blue Bottle Becomes Acquisition Target

According to Reuters this month, Nestlé has commissioned Morgan Stanley to evaluate the future development plans for Blue Bottle.

Blue Bottle, founded in 2002 in California, was invested in by Nestlé in 2017. At that time, Nestlé acquired a 68% stake for approximately $425 million.

In addition to the United States, Blue Bottle has stores in mainland China, Hong Kong, Japan, Singapore, and South Korea.

% Arabica was established in 2013 and has stores in Asia and the Middle East, with some locations in Europe and the Americas. According to the company's website, its stores are primarily concentrated in mainland China, with over 80 locations