Coca-Cola reportedly abandons plans to sell Costa Coffee chain

"Coca-Cola has reportedly abandoned plans to sell its Costa Coffee chain after bids from private equity firms failed to meet its expectations. The US soft drinks company halted discussions with remaining bidders in December, according to the Financial Times, ending a months-long auction process. It first emerged in August that Coca-Cola was working with bankers on a review of Costa that could lead to the chain being sold off in a cut-price deal, of roughly half what it paid for the business."

"Coca-Cola had high hopes for Britain's largest coffee chain when it bought it for 3.9bn in 2018 from Whitbread, the owner of Premier Inn hotels. However, since then the chain has struggled in the face of rising costs, particularly the rise in coffee bean prices, and competition on UK high streets. As a result, Coca-Cola was reportedly seeking about 2bn for Costa, which would have resulted in it realising a multibillion-pound loss."

"The companies in the latter stages of talks to buy Costa included Asda's owner, TDR Capital, and Bain Capital's special situations fund, which owns Gail's Bakery and PizzaExpress, according to the FT. The newspaper added that the private equity firms Apollo, KKR and Centurium Capital were involved earlier in the auction process, which was handled by the investment bank Lazard."

Coca-Cola halted sale talks for Costa Coffee in December and ended a months-long auction after private equity bids failed to meet expectations. Coca-Cola acquired Costa for 3.9bn in 2018 from Whitbread but later sought about 2bn, implying a multibillion-pound loss if sold. Costa operates roughly 2,700 outlets across the UK and Ireland and has faced rising costs, including coffee bean prices, and intensified competition from both upmarket rivals and cheaper offerings. Bidders in later stages included TDR Capital and Bain Capital’s special situations fund, with earlier interest from Apollo, KKR and Centurium, and Lazard ran the process. Leadership changes leave a future sale not definitively ruled out.

Read at www.theguardian.com