Coca-Cola Explores £2 Billion Sale of Costa Coffee
Coca-Cola is seeking to sell Costa Coffee, with a price tag of around £2 billion. The world's second-largest coffee chain, Costa Coffee operates over 2,700 branches in the UK and Ireland. Several parties have shown interest, including private equity firms TDR Capital and Bain Capital.
TDR Capital, which owns Asda, has expressed interest in acquiring Costa Coffee. Meanwhile, Bain Capital's Special Situations unit has submitted a bid. This unit, managing $21.6bn in assets, was established in 2018 to handle complex asset liquidity. It previously invested in PizzaExpress during the pandemic and is the controlling shareholder of Gail's.
Costa Coffee has faced challenges since the Covid-19 pandemic, with rising costs and subdued consumer spending leading to an annual loss of £13.8 million on revenues of £1.2 billion in 2023. Coca-Cola acquired Costa Coffee in 2018 for £3.9 billion as part of a diversification strategy. Apollo declined to submit a bid for the coffee chain.
Costa Coffee, despite recent struggles, remains an attractive asset due to its extensive UK and Ireland presence. Bain Capital and TDR Capital are currently in negotiations, with a potential sale price of about £2 billion. JAB Holding has also submitted a preferential bid, keeping the process competitive.
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