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MILAN – The Coca-Cola Company has reportedly ditched plans to sell Costa Coffee, at least for the time being. According to the Financial Times, which quoted two people familiar with the matter, the U.S. beverage giant ended talks with the remaining bidders in December, as their offers came in below expectations.
Firms in the latter rounds of negotiations included Asda owner TDR Capital and Bain Capital’s special situations fund, owner of the bakery chain Gail’s and PizzaExpress, the people said.
The company could still revive plans to sell the asset in the medium term, the FT also reported. Coca-Cola began sounding out the market for the sale of Costa Coffee last August, with Lazard acting as its adviser.
According to the FT at the time, Coke expected to raise around £2 billion from the sale of the asset, compared to the £3.9 billion it paid to acquire the world’s second-largest coffee chain after Starbucks from British leisure giant Whitbread in 2018.
Initially, negotiations were also started with KKR and Centurium Capital, the latter being the majority shareholder of the Chinese chain Luckin Coffee.
The acquisition of Costa Coffee has proved to be a disappointing deal for Coca-Cola
CEO James Quincey, who will hand over the reins to Henrique Braun in two months’ time, admitted last year, during a call, that Costa had “not quite delivered” and was not “where we wanted it to be from an investment hypothesis point of view.”
In 2024, Costa’s operating losses more than doubled to £13.5 million, compared with revenues of £1.2 billion.
Costa has a strategic positioning problem in the UK, facing competition from both cheaper operators, such as Greggs, and more upmarket independent coffee shops.
The failure of the sale process may force Coke to write down the value of Costa on its books, says the FT
In 2024 Costa took an impairment of £48.6mn on the value of its Chinese business, attributing the move to weaker than expected demand in its coffee shops in Shanghai.
Costa Coffee is present in 50 countries around the world, with 2,700+ coffee shops in the UK & Ireland and 1,300+ globally.
