Coca-Cola is holding last-ditch talks with Asda owner TDR Capital in a bid to rescue a sale of Costa Coffee.
According to the Financial Times, people close to the situation said private equity firm TDR was chosen as the drinks giant’s preferred bidder last week. However, they said discussions with Coca-Cola and its advisers at Lazard had come into complications over price.
In August, it was revealed Coca-Cola was exploring the potential sale of Costa just five years after acquiring it from Premier Inn owner Whitbread in a £3.9bn deal. Analysts have suggested Costa may now be sold for £2bn.
It is understood Coca-Cola will decide whether to continue with the sale process or suspend it completely, people familiar with the matter said.
If it were to go ahead, the current agreement would see the drinks firm holding onto a minority stake in Costa, with the ability for this to be modified in size in order to complete on a deal, the FT reported.
A buyer would be eyeing nearly 2,800 Costa shops in the UK and Ireland.
TDR Capital, which became the majority owner of Asda last year with a 67.5% shareholding in the supermarket chain, was first reported to be among potential bidders for the coffee chain in September.
It joined reports that Apollo Management Group, the owner of Wagamama’s parent company The Restaurant Group, and US-based private equity investor KKR had also held initial talks with Lazard. City sources have since said Apollo had not moved ahead with an offer.
In 2024, Coca-Cola reported a 3% decline in coffee sales, primarily due to the performance of Costa in the UK.
During the fmcg giant’s second quarter earnings call in July, CEO James Quincey said Costa had “not quite delivered” and was “not where we wanted it to be from an investment hypothesis point of view”.
No comments yet