Coca-Cola drops plan to sell Costa after bids fall short

Coca-Cola has reportedly ended efforts to sell Costa Coffee after private equity bids for the UK coffee shop chain failed to meet its expectations, according to The Financial Times.The group is said to have halted talks with remaining bidders in December, bringing to an end an auction process that had been running for several months, sources told the paper. 

Firms involved in the later stages of discussions reportedly included TDR Capital, the owner of Asda, and Bain Capital’s special situations fund, which owns bakery chain Gail’s and PizzaExpress. 

Sources added that Apollo, KKR and Centurium Capital were also involved in earlier discussions. 

Coca-Cola had been seeking a valuation of about £2bn for Costa, roughly half the £3.9bn it paid in 2018 to acquire the business from Whitbread, the owner of Premier Inn. One potential deal structure would have seen Coca-Cola retain a minority stake in the chain.

Costa operates more than 2,700 branches across the UK and Ireland and has struggled to meet expectations since its acquisition. 

The decision to pause the sale comes ahead of a leadership transition at Coca-Cola, as chief operating officer Henrique Braun is set to replace James Quincey as chief executive in March, with Quincey moving into the role of executive chair.

One person familiar with Coca-Cola told the Financial Times that the company could revive plans to sell Costa in the medium term.

Coca-Cola has been contacted for comment.