Elliott Management Acquires Major Stake in Starbucks, Engages with Management

Elliott Management recently acquired a significant stake in Starbucks and is working with the company’s management to improve its stock, according to a report published Friday by the Wall Street Journal, citing people familiar with the matter.

Elliott representatives declined to comment. As of its last statement on March 31, the hedge fund did not hold any Starbucks shares.

A Starbucks spokesperson said the company does not respond to rumors or speculation. Despite that, Starbucks shares rose more than 6% on Friday.

Elliott Management, known for its influential role in activist investing, is one of the world’s largest hedge funds. The firm has made several substantial investments in recent months, including positions in Southwest Airlines, SoftBank, Johnson Controls and Musical Instruments.

The Wall Street Journal could not determine the exact size of Elliott’s stake or the specific demands it was making, but it suggested a deal could be imminent.

Earlier this year, Starbucks faced an activist campaign from its unions, following an organizing effort that began in 2021. That campaign ended with the Strategic Organizing Center withdrawing its board candidates. Discussions between Starbucks management and workers are ongoing.

Starbucks has faced several challenges in recent quarters and has undergone a series of leadership changes. In April, the company reported disappointing quarterly results, with U.S. same-store sales down 3% and customer traffic down 7%. As a result, Starbucks has lowered its 2024 forecast.

The coffee chain also reported incomplete order rates of about 11% through its mobile app and noted a decrease in the frequency of visits from one-time customers.

CEO Laxman Narasimhan, currently under pressure, has stressed the need for improvements across all stores. Narasimhan was chosen by former CEO Howard Schultz to lead the company after Kevin Johnson stepped down. Schultz has acknowledged Starbucks’ challenges but has no plans to return as CEO for a fourth term.