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American investment giant KKR is reportedly in talks to acquire Costa Coffee, according to Sky News.
The publication said the firm has joined a small number of parties currently in talks with The Coca-Cola Company and its advisers at investment bank Lazard regarding a deal.
Sky added that KKR’s involvement was “unexpected” as it had appeared to drop its interest in a potential bid in late August.
Further details of KKR’s offer were unclear this week, but one source told Sky its interest “remained fluid”, and it could still decide against a binding offer or partner with another party.
Other interested parties are understood to include Bain Capital, part-owner of the bakery chain Gail’s, and TDR Capital, which holds a stake in Asda. Management presentations to prospective buyers are expected to take place this week.
Coca-Cola intends to keep ownership of Costa’s ready-to-drink range, which is sold through multiple retailers. Further offers for the coffee chain are due in the coming days.
One insider suggested the valuation for Costa could be as low as £1.5bn, less than half of the £3.9bn Coca-Cola paid when it bought the business in 2021. It remains uncertain whether the company would accept a sale at that level.
Costa operates more than 2,000 stores across the UK and over 3,000 globally.
KKR declined to comment.
