The Atlanta-based soft drinks giant is working with bankers at Lazard to gauge interest in a sale of the coffee chain it agreed to buy in 2018 for £3.9bn. Sky News can exclusively reveal that Coca-Cola is exploring options to sell Costa, Britain’s biggest high street coffee chain.
Costa trades from over 2,000 stores in the UK and more than 3,000 globally, with a global workforce of around 35,000 employees. However, its performance has been weak since Coca-Cola acquired it in 2018, with revenues increasing by only 9% in 2023 compared to the previous year.
Coca-Cola’s CEO, James Quincey, had expressed concerns about the company’s performance on an earnings call last month, saying that the £3.9bn acquisition was “a lot of money” and that he wanted it to work as hard as possible.
The sale of Costa could crystallise a multibillion-pound loss for Coca-Cola, with some analysts suggesting that the coffee chain might now command a price tag of just £2bn in a sale process. However, this would not significantly impact Coca-Cola’s massive market capitalisation of $304.2bn (£224.9bn).
Costa has faced growing competition from more upmarket chains and has struggled to achieve consistent growth. Its main rivals include Starbucks, Caffe Nero, and Pret a Manger, which is being prepared for a stake sale and possible public market flotation.
A sale of Costa would mark a significant shift in strategy for the company, which had initially hoped to use the coffee chain as a platform to grow its global brand. Instead, it appears that Coca-Cola is now looking to cut its losses and move on from the underperforming business.
Source: https://news.sky.com/story/coca-cola-brews-up-sale-of-high-street-coffee-giant-costa-13416553