What does Centurium's Blue Bottle deal mean for Luckin Coffee?

Centurium Capital, the largest shareholder of Luckin Coffee, has signed an agreement to acquire Blue Bottle Coffee's global stores from Nestlé for less than $400 million, according to LatePost and 36Kr. Nestlé will retain Blue Bottle's coffee machine, capsule, and other consumer product businesses. The agreement has been signed, but the deal has not yet been completed.

Blue Bottle is Nestlé's specialty coffee brand, and the deal is seen as Centurium's step into the high-end specialty coffee market. Nestlé had been seeking to sell the physical store business, with the final price expected to fall well below its original acquisition valuation. The move has also sparked speculation about Luckin's brand integration, after Centurium previously held talks with Starbucks, Costa, MStand, and %Arabica.

A major piece of news spread rapidly through the coffee world: Luckin Coffee's largest shareholder, Centurium Capital, has won the bid for Blue Bottle Coffee and is about to complete the deal with Nestlé. According to a report by LatePost, Centurium will acquire Blue Bottle's global stores, while Nestlé will retain the coffee machine and capsule businesses. 36Kr further revealed that the transaction price is less than $400 million, and the agreement has been signed but the deal has not yet been completed. Centurium's move is seen as an important step into the high-end specialty coffee market, and it has also sparked widespread speculation in the industry about the future direction of Luckin's brand integration. This article will sort through the details of the transaction, reactions from various parties, and Centurium's previous contact with brands such as Starbucks, Costa, Mstand, and %Arabica.

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This afternoon, LatePost exclusively reported that Centurium Capital, the largest shareholder of Luckin Coffee, has won the bid for Blue Bottle Coffee and is about to complete the deal with Nestlé.

The report mentioned that several informed sources confirmed this development to LatePost. One source close to Luckin revealed that Centurium is buying Blue Bottle Coffee's global stores, while Nestlé will retain Blue Bottle's coffee machine and capsule businesses. Another person close to Centurium said that the deal has now been signed but has not yet been completed.

In fact, in mid-December last year, Bloomberg reported that Luckin and its major shareholder Centurium Capital were considering bidding for Blue Bottle Coffee, Nestlé's specialty coffee brand. At the same time, Reuters reported that Nestlé intended to sell Blue Bottle Coffee's physical store business, and sources noted that the final transaction price was expected to be significantly lower than the acquisition valuation at the time.

It is worth noting that 36Kr reported that Centurium has reached an agreement with Nestlé to acquire Blue Bottle Coffee's global stores from Nestlé for less than $400 million. In addition, 36Kr revealed that once Centurium's deal with Nestlé is completed, Nestlé will still retain Blue Bottle's FMCG businesses, such as coffee beans, instant beverages, and ready-to-drink beverages.

This sudden news has undoubtedly drawn attention from people across the industry. Multiple domestic and international media outlets have sought confirmation from Centurium Capital, Luckin, Nestlé, Blue Bottle Coffee, and other parties as to whether the above information is true, but so far none of them have commented or given a specific response.

In addition, 36Kr's report cited a person in the coffee industry as saying that Luckin is intensively contacting "brand-oriented" recruitment targets in the market to prepare for the upcoming integration of Blue Bottle Coffee, saying, "To sell a cup of coffee for more than 40 yuan, brand is certainly the top priority."

In fact, over the past six months or so, Centurium Capital, as the actual controlling party of Luckin Coffee, has shown interest in brands such as Starbucks, Costa, Mstand, and %Arabica. However, during the contact process, informed sources revealed that because Centurium is a shareholder of Luckin and Starbucks hopes to retain part of the equity in its China business, the possibility of reaching this deal is slim.

Although Costa "has a very good base in the UK, with more than $200 million in profit each year," it has quite a few drawbacks, such as having many old stores in Europe and facing great difficulty in renovation, and Costa's China business is not optimistic. Therefore, Centurium gave up participating in the bidding for Costa.

As for other brands, people in the investment industry revealed that although Centurium Capital had contact with %Arabica, because %Arabica's performance is not as good as Blue Bottle Coffee's, and %Arabica's equity is relatively dispersed, making mergers and acquisitions difficult, after considering multiple factors, the final deal between Centurium and %Arabica did not move forward.

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