Coca-Cola Drops Plan to Sell Costa Coffee Chain After Private Equity Firms Fail to Meet Expectations
In a surprise move, Coca-Cola has reportedly abandoned plans to sell its struggling coffee chain, Costa Coffee, after private equity firms failed to meet the company's expectations. The decision marks a significant shift in the company's strategy for the UK-based business, which had been seen as a key acquisition by Coca-Cola when it bought the chain for £3.9 billion in 2018.
Since then, Costa has struggled to gain traction due to rising costs, particularly higher coffee bean prices, and intense competition from other retailers on UK high streets. As a result, Coca-Cola was reportedly seeking a sale price of around £2 billion for the chain, which would have resulted in the company posting a multibillion-pound loss.
Several private equity firms had expressed interest in acquiring Costa Coffee, including TDR Capital and Bain Capital's special situations fund. However, the bids ultimately failed to meet Coca-Cola's expectations, leading the company to halt discussions with remaining bidders.
The decision comes as outgoing CEO James Quincey prepares to hand over the reins to Henrique Braun, who will become the new chief executive officer at the end of March. While Quincey had previously indicated that Costa was "not where we wanted it to be from an investment hypothesis point of view", he did not rule out selling the chain in the future.
Costa Coffee has faced significant challenges in recent years, including declining foot traffic and increased competition from upmarket rivals like Gail's Bakery and independent coffee shops. The company reported operating losses of £13.5 million in its latest financial year, citing "challenging conditions with soft footfall and growth of value-led competitors".
Coca-Cola and Costa Coffee did not comment on the report.
In a surprise move, Coca-Cola has reportedly abandoned plans to sell its struggling coffee chain, Costa Coffee, after private equity firms failed to meet the company's expectations. The decision marks a significant shift in the company's strategy for the UK-based business, which had been seen as a key acquisition by Coca-Cola when it bought the chain for £3.9 billion in 2018.
Since then, Costa has struggled to gain traction due to rising costs, particularly higher coffee bean prices, and intense competition from other retailers on UK high streets. As a result, Coca-Cola was reportedly seeking a sale price of around £2 billion for the chain, which would have resulted in the company posting a multibillion-pound loss.
Several private equity firms had expressed interest in acquiring Costa Coffee, including TDR Capital and Bain Capital's special situations fund. However, the bids ultimately failed to meet Coca-Cola's expectations, leading the company to halt discussions with remaining bidders.
The decision comes as outgoing CEO James Quincey prepares to hand over the reins to Henrique Braun, who will become the new chief executive officer at the end of March. While Quincey had previously indicated that Costa was "not where we wanted it to be from an investment hypothesis point of view", he did not rule out selling the chain in the future.
Costa Coffee has faced significant challenges in recent years, including declining foot traffic and increased competition from upmarket rivals like Gail's Bakery and independent coffee shops. The company reported operating losses of £13.5 million in its latest financial year, citing "challenging conditions with soft footfall and growth of value-led competitors".
Coca-Cola and Costa Coffee did not comment on the report.
they just wanted a good home but didn't find it 
those private equity firms were supposed to bring them back up on their feet 
and now coke is all like "oh nope, we'll just keep it" 
i guess that's what happens when things get tough 
the foot traffic has been declining and the competition from other coffee shops is getting crazy 
️ maybe they should've stuck to making yummy drinks instead of trying to own a cafe chain 
i feel for the private equity firms tho, they must've been thinking it was gonna be a sweet deal 
maybe coke just decided to keep it inhouse instead? idk but i hope henrique braun brings some life to costa coffee 
. I mean, I get it, the coffee game's tough out there, but £2 billion is a pretty big ask for a business that's struggling to stay afloat 
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. Fingers crossed for them! 
& now coke's backing out of the sale deal 
it's like, what were they thinking? 
these 2 firms had their chances to get costa but failed miserably 
Like, £3.9 billion is a lot of money to just write off. What's going on with these private equity firms? Can't they come up with a better plan than this 
. I mean, Costa Coffee has been struggling for years and now the whole company's gonna take a hit 'cause some firms can't make it work 
. It's been a tough road for Costa Coffee since Coke bought it. Rising costs and competition from other retailers really took their toll. I don't blame them for not wanting to lose more money, £2 billion is a pretty big hit 
. Don't get me wrong, I love a good cuppa and all, but this just shows how hard it can be to turn around a struggling business. What do u think? Should've just stuck with being a drink company 
. Anyway, hope Braun does better than Quincey did 
Whatever happens next, I'm sure Costa coffee fans will be keeping an eye on the situation 
. Private equity firms had some serious doubts about its value, but I guess Coke just wasn't ready to write it off yet 
2 billion is a lot of dosh and i can see why they'd wanna get outta there 
. The real question is what's going on with the £2 billion price tag 
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It's been struggling for a while now & it's amazing that they're choosing to invest in their brand instead of selling it off. Maybe this is the wake-up call they needed? 
that Coca-Cola dropped plans to sell Costa Coffee! I mean, it's been struggling for a while now and I was worried they'd cut their losses too quickly. But keeping it under their umbrella might just give them the chance to turn things around 
. Plus, who knows, maybe Henrique Braun's gonna whip that place into shape 
and now coke is just gonna keep having it as a loss? 
hope henrique braun has a better plan in store for costa, but let's be real, it's gonna be tough 
. Maybe Braun will have some new ideas to turn things around? 
that Coca-Cola decided to stick it out with Costa Coffee! I mean, £13.5 million in losses is a big deal 
, but I guess they're betting on something turning around soon. It's like when you order a coffee and it's not made just right - you don't give up on the barista that easily 
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anyway i got a tea subscription for 6 months now and its been lifesaver, i was getting so tired of the same ol coffee beans 
what's up with private equity firms tho? cant they just make a deal happen