In a significant strategic reversal, Coca-Cola has reportedly abandoned its plans to sell the Costa Coffee chain after offers from interested private equity firms failed to meet its financial expectations.
Failed Auction Process and Key Bidders
According to a report in the Financial Times, the American beverage giant called off discussions with remaining suitors in December 2024, ending an auction that had run for several months. The process was overseen by investment bank Lazard.
Insiders indicated that the final round of negotiations involved private equity firms TDR Capital, which owns the supermarket chain Asda, and Bain Capital Special Situations, the proprietor of Gails Bakery and Pizza Express. Earlier in the process, other major firms like Apollo, KKR, and Centurium Capital—the owner of China's Luckin Coffee—had also been engaged.
Financial Targets and Strategic Implications
Coca-Cola had been aiming to secure around £2 billion from the sale. This figure is notably less than half of the £3.9 billion it paid to acquire Costa from Whitbread, the Premier Inn owner, back in 2018. One potential deal structure with TDR Capital could have seen Coca-Cola retain a minority stake in the business.
A source familiar with Coca-Cola's strategy told the Financial Times that the company now intends to revisit plans to offload Costa in the medium term. This decision comes as the company prepares for a leadership transition, with Chief Operating Officer Henrique Braun set to succeed James Quincey as Chief Executive in March 2026.
Market Challenges Facing the Costa Chain
The halted sale coincides with a period of difficulty for the UK's largest coffee chain, which operates approximately 2,700 branches across the UK and Ireland. Outgoing CEO James Quincey admitted to analysts last summer that Costa had "not delivered" for the parent company.
The competitive landscape has intensified, with Costa squeezed by both upmarket independent cafes and more affordable rivals like Greggs. This pressure is reflected in its financial performance; accounts filed at Companies House show Costa's operating loss more than doubled to £13.5 million on revenues of £1.2 billion in 2024. The company blamed cheaper competitors and reduced customer footfall.
Broader sector headwinds, including higher coffee bean prices and increased staffing costs partly linked to last April's rise in employers' National Insurance, have also impacted UK coffee shops.
The unsuccessful sale attempt may now force Coca-Cola to write down the value of Costa on its balance sheet. This follows a £51 million asset write-down last year within Costa's express vending machine business after it decided to discontinue certain prototypes.
