One of the earliest bubble tea makers is on the block, with reports that Gong Cha Group’s majority stakeholder is looking to sell the company, in a deal that could value the chain at around $2 billion. Now, the big question is who might show up for such a deal, which is likely to cost $1 billion or more.
While it’s possible another private equity firm could buy out the stake held by TA Associates since 2019, a stronger possibility looks like a combination of private equity and one of China’s other top milk tea chains. Many of those chains, including Mixue (2097.HK), Chagee (CHA.US) and Chabaidao (2555.HK), have shown an interest in global expansion, which they could instantly achieve by acquiring Gong Cha’s more than 2,200 shops in 33 global markets.
What’s more, all of those Chinese chains are profitable, relatively debt-free, are have big piles of cash following IPOs that raised hundreds of millions of dollars over the last two years, mostly in Hong Kong. We’ll take a closer look at some of the top names among that group shortly, and which look like the strongest contenders to make possible bids for Gong Cha.