Coca-Cola’s Costa Coffee Sale Faces Uncertainty as Talks With TDR Capital Hit Snag

Coca-Cola’s proposed sale of its British coffee chain Costa Coffee is facing renewed uncertainty as negotiations with private equity firm TDR Capital risk breaking down over valuation concerns, according to a report by the Financial Times. The discussions, described as last-ditch talks taking place over the weekend, are seen as a final attempt to salvage the deal after earlier progress stalled.

TDR Capital had been chosen earlier this week as Coca-Cola’s preferred bidder for Costa Coffee. However, people familiar with the matter said the talks have stumbled primarily due to disagreements over price. The structure of the potential transaction reportedly includes Coca-Cola retaining a minority stake in Costa Coffee, a factor that may also be contributing to the complexity of negotiations.

Reuters noted that it could not independently verify the Financial Times report. TDR Capital declined to comment on the situation, while Coca-Cola did not immediately respond to requests for comment. Investment bank Lazard, which has been advising Coca-Cola on strategic options for Costa Coffee, also did not respond.

Speculation around the future of Costa Coffee has been building for months. In August, sources told Reuters that Coca-Cola was working with Lazard to review various options for the coffee chain, including a potential sale. These strategic considerations come as Coca-Cola continues to refine its portfolio and focus on core growth areas amid changing consumer preferences and market conditions.

Costa Coffee has been part of Coca-Cola’s portfolio since 2018, when the U.S. soft drinks giant acquired the brand from Whitbread Plc for an enterprise value of $5.1 billion. The acquisition marked Coca-Cola’s major entry into the global hot beverages market, significantly expanding its footprint beyond carbonated soft drinks.

Any potential sale of Costa Coffee would represent a major shift in Coca-Cola’s strategy and could have wider implications for the global coffee market. If talks with TDR Capital collapse, Coca-Cola may need to revisit alternative options, including engaging other bidders or reassessing its long-term plans for the brand. As negotiations continue, investors and industry observers will be watching closely to see whether a deal can still be reached.