Coca-Cola Cancels Costa Coffee Sale: FT Reports

• Coca-Cola terminated talks with bidders in December after a multi-month auction process failed to meet valuation targets
• Private equity firms submitted offers that came in below the company's expectations for the Costa Coffee chain
• The decision marks a reversal of Coca-Cola's strategy to divest the coffee business it had put up for sale

Summary

Coca-Cola has canceled the planned sale of its Costa Coffee chain after receiving disappointing bids from private equity firms, according to a Financial Times report on January 14. The U.S. beverage giant ended discussions with remaining bidders in December, bringing a months-long auction process to a halt.

The decision was driven by offers that fell below the company's expectations, though specific valuation figures were not disclosed. The report cited two people familiar with the matter, and Reuters was unable to independently verify the information at the time of publication.

Market Implications

This development signals that Costa Coffee will remain part of Coca-Cola's portfolio for the foreseeable future, despite the company's apparent willingness to divest the asset. The failed sale suggests potential challenges in the coffee retail sector's valuation environment or specific concerns about Costa's performance that may have deterred buyers from meeting Coca-Cola's price expectations.

Coca-Cola acquired Costa Coffee in 2018 for approximately $5.1 billion as part of its diversification strategy beyond carbonated beverages. The abandoned sale raises questions about the company's strategic direction for its coffee business and whether it will explore alternative options, including retaining and investing in the brand or pursuing a sale at a later date under more favorable market conditions.

The outcome may also reflect broader caution among private equity buyers in the current economic climate, potentially impacting valuations for similar retail food and beverage assets in the M&A market.