Coca-Cola (KO) is undertaking last-ditch negotiations with private equity company TDR Capital this weekend in an effort to save its proposed sale of Costa Coffee, which is in danger of failing.
According to those familiar with the situation, TDR, the owner of Asda, was chosen as Coke's preferred bidder for Costa earlier this week following a board meeting in New York. However, one of the persons claims that discussions with Coke and its consultants at Lazard have stumbled over the price.
According to the persons, Coke will decide whether to completely abandon the sale process next week. According to one of the persons, the agreement on the table calls for Coke to keep a minority ownership in Costa, but the size of the holding may be changed to Coke's advantage in order to close the deal. According to a prior report of the Financial Times, Coke sought approximately £2 billion ($2.7 billion) for Costa.
In 2018, Whitbread, the owner of Premier Inn, sold Costa to the beverage group for £3.9 billion ($5.2 billion). However, since then, independent operators and mass-market competitors like Greggs have posed a threat to the company.
The company's finances are in the deficit due to rising expenses for everything from coffee beans to employee salaries.
The company's finances are in the deficit due to rising expenses for everything from coffee beans to employee salaries.
According to the most recent set of records available at Companies House, Costa recorded an annual loss of £13.8 million ($18.4 million) on revenues of £1.2 billion ($1.6 billion) in 2023. According to one of the persons, TDR, which co-owns the petrol forecourt company EG Group, is looking to acquire Costa's international and UK business, excluding its operations in China.
Bain Capital's special circumstances group, which owns Gail's and PizzaExpress, was one of the other bids for Costa. People acquainted with the process claim that Centurium Capital, the private equity owner of the Luckin Coffee chain in China, has also participated in the auction.
Apollo and KKR, two private capital firms, have both withdrawn from the process in recent months. This week, Coke said that Henrique Braun will take over as CEO in March, replacing James Quincey. Quincey will take over as executive chair after telling analysts in July that Costa had "not delivered."
