Beverage giant The Coca-Cola Company is exploring a sale of its UK coffee chain Costa, according to Sky News. This move may signal a reversal of the company’s strategy to diversify away from sugary soft drinks. Coca-Cola acquired Costa in 2018 for £3.9 billion and aimed to expand its presence in the booming coffee market.
However, recent financial reports show that Costa’s revenue has decreased since the acquisition, with £1.22 billion in 2023 compared to £1.3 billion in 2018. The company also recorded a loss of £9.6 million due to inflationary pressures and investment impairments.
Despite this, Coca-Cola has paid over £250 million in dividends to Costa since its takeover. If the sale is successful, it could value Costa at around £2 billion, but given Coca-Cola’s large market cap exceeding $300 billion, the impact on the company’s finances would be relatively minor.
The sale of Costa could also mark a change in Coca-Cola’s strategy, which has focused on diversifying away from sugary drinks. The move comes as early talks have begun with private equity firms and investment banks, including Lazard.
Source: https://www.tipranks.com/news/coca-cola-ko-considers-selling-costa-coffee-in-potential-multi-billion-pound-loss