What Happened with the Costa Coffee Sale and Why It Stalled?

Coca-Cola has ended the sale process for its UK coffee chain Costa after months of bidding failed to reach its expected £2 billion. Coca-Cola bought Costa for £3.9 billion in 2018, and the valuation has since shrunk sharply. The auction drew interest from Bain Capital, KKR, and Centurium Capital, but bidders including Centurium, Apollo, and KKR withdrew, leaving Bain Capital and TDR at the table.

Reports of the sale first surfaced in August 2025, with later coverage noting the preliminary bid had fallen to about £1 billion, a quarter of the purchase price. Costa's China business has become its worst loss-making area, with stores shrinking, and was even excluded from the acquisition scope by potential buyers. Coca-Cola may restart the process in the future.

Global beverage giant Coca-Cola recently terminated the sale process for its UK coffee chain brand Costa. The auction, which lasted several months, stalled because none of the bidders' offers reached Coca-Cola's expected £2 billion. From a high-profile acquisition at £3.9 billion in 2018 to a valuation now shrunk to a quarter of that, Costa's fortunes reflect the fierce competition in the chain coffee market. Its China business has become the worst loss-making area, with stores continuing to shrink, and was even excluded separately from the acquisition scope by potential buyers. This article will sort through the ins and outs of the Costa sale case, key financial data, and future direction.

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According to the UK's Financial Times, because private equity buyers' bids failed to meet Coca-Cola's expectations, the global beverage giant has decided not to continue advancing the plan to sell its UK coffee chain brand Costa.

In August 2025, Sky News in the UK was the first to exclusively report that Coca-Cola was working with investment bank Lazard to evaluate the possibility of selling Costa, and people familiar with the matter revealed that Coca-Cola had already made preliminary contact with multiple private equity investment institutions. At the time, media pointed out that Coca-Cola bought the coffee brand for £3.9 billion in 2018, while the asking price after this evaluation was only £2 billion.

By November 2025, Bloomberg and other media followed up with reports on the sale progress, saying that the planned sale of Costa had attracted attention from several well-known investment institutions, including Bain Capital, KKR, and Centurium Capital, the major shareholder of Luckin. However, sources said that the preliminary valuation bid for Costa was no longer the original 50% discount, but had further shrunk to a quarter of the acquisition price, about £1 billion.

Interestingly, although Costa's bargaining price kept falling and on the surface it seemed easier to sell, the actual bidding negotiation process was not smooth. According to sources, Centurium Capital, the US investment fund Apollo, KKR and others that participated in the bidding in the early stage successively withdrew. By the later stage of the sale process, only Bain Capital and TDR remained at the negotiating table, and the two companies' bids were £1.2 billion and £1.4 billion respectively.

Another interesting point is that in mid-December 2025, media said Coca-Cola was in final negotiations with TDR, trying to salvage the Costa sale plan. It is understood that what TDR sought to acquire were Costa's UK and international businesses, but not its China business.

Looking at Costa's financial performance, in 2024 its global revenue was £1.2 billion, losses in the UK market widened to £13.5 million, and its China business recorded an impairment loss of £48.6 million.

Costa's China business has undoubtedly become its worst loss-making area. The number of stores has continued to shrink in recent years, and the former "Starbucks rival" has lost its former glory, becoming a coffee brand forgotten by consumers. For this reason, TDR separated it out during negotiations and was unwilling to acquire its China business.

Just as the outside world speculated that Coca-Cola might reach a deal with TDR, which had made the higher bid, the Financial Times cited people familiar with the matter as saying that Coca-Cola terminated negotiations with Costa's remaining bidders in December 2025, halting the auction process that had lasted several months. As for the biggest factor preventing a deal, it was undoubtedly "price": the bidders' offers were all below Coca-Cola's expected £2 billion.

However, the report cited "a person familiar with Coca-Cola's internal thinking" as saying that the company may still restart the plan to sell Costa in the medium term in the future.

Image source: Internet

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