American investment firm KKR in talks to acquire Costa Coffee
What's the story
KKR, a leading American investment firm, is considering acquiring Costa Coffee, one of Britain's largest high street hospitality groups. KKR is said to be in talks with The Coca-Cola Company and its advisors at Lazard for a potential deal. This comes as a surprise as KKR had seemingly lost interest in pursuing a bid in late August after the auction news broke.
Bid details
KKR's offer details remain uncertain
While KKR's interest in Costa Coffee is confirmed, the specifics of its offer remain unclear. According to Sky News, the firm's interest is still fluid and it may decide against a binding offer or partner with another bidder. This puts KKR in competition with other potential buyers such as Bain Capital and TDR Capital.
Retention and valuation
Coca-Cola's struggles with Costa Coffee
Coca-Cola plans to keep Costa's ready-to-drink range, which is sold through other retailers. The company has been struggling with Costa's performance for some time now. It was reported that Costa could be valued at around £1.5 billion, less than half of the £3.9 billion Coca-Cola paid in 2021. However, it remains unclear if Coca-Cola would be willing to sell the business at this price point.
Business overview
Costa Coffee's financial performance and global presence
Costa Coffee operates over 2,000 stores in the UK and more than 3,000 worldwide. The chain employs around 35,000 people globally. In 2023, Costa recorded revenues of £1.22 billion, a 9% increase from last year but still below the £1.3 billion it made in 2018 before Coca-Cola's acquisition.