Starbucks on Monday announced it is forming a joint venture with Boyu Capital to operate the company’s locations in China.

Under the terms of the deal valued at $4 billion, Boyu, an alternative asset management firm, will hold up to a 60% interest in the joint venture. Starbucks will hold a 40% stake and maintain its ability to license the brand and intellectual property to the joint venture.

The announcement comes after the coffee giant conducted a months-long review of options that included strategic partnerships. Starbucks values its China business at more than $13 billion, the company said. The valuation includes the sale of the controlling stake in the joint venture, combined with the value of both its retained interest and the ongoing licensing fees that will paid to the company in the future.

The deal is expected to close in the second quarter of fiscal 2026, pending regulatory approval.

Starbucks opened its first store in China in 1999. By 2015, it had grown to become the company’s second-largest market, trailing only the United States.

“Building on our positive business momentum, our partnership with Boyu will enable Starbucks China to fully unlock the vast market opportunity,” Molly Liu, CEO of Starbucks China, said in a statement.

Today, the company has roughly 8,000 locations in China, but Starbucks has big ambitions for the market. CEO Brian Niccol told CNBC’s Kate Rogers in September that the country could one day have 20,000 or even 30,000 locations nationwide.

But in recent years, Starbucks has seen its sales in China plummet, first due to the pandemic and related government restrictions and later caused by increased competition. Rival Luckin Coffee now has more stores in China than Starbucks and has won over customers with lower-priced drinks than the U.S. coffee chain.

On Wednesday, the company reported that its fiscal-fourth quarter same-store sales in China increased 2%, fueled by a 9% increase in traffic. However, as Starbucks has leaned into discounting to compete with local rivals, the average ticket at its Chinese cafes has fallen, weighing on the company’s profits.

While Starbucks executives have continually expressed optimism about the company’s long-term prospects in China, its weak performance in the country has weighed on Starbucks’ overall financial results.

For decades, China’s massive population and fast-growing economy have made it an attractive market for U.S. companies. But in recent years, an economic slowdown and greater competition from home-grown brands have made some companies rethink their strategies.

Earlier this year, Burger King’s parent company Restaurant Brands International bought its struggling China business from TFI Asia Holdings with the goal of selling it to another operator. On the other hand, McDonald’s increased its minority stake in its China business from 20% to 48% two years ago, aiming to benefit from the market’s growth.