Coca-Cola Considers Selling Costa: PE Firms Engaged, Valuation Exceeds $20 Billion

 

According to insiders, Coca-Cola has enlisted investment bank Lazard to evaluate the possibility of selling its British coffee chain Costa Coffee, potentially through a “full or partial sale.”  

 

The Atlanta-based soft drink giant has tasked Lazard with assessing options and gauging interest in the business, which it acquired for £3.9 billion ($5.3 billion) in 2018.  

 

Reports indicate that Coca-Cola has held preliminary discussions with a select group of potential bidders, including private equity (PE) firms.  

 

According to Sky News, “indicative bids are expected in early autumn,” and if the process proceeds smoothly, exclusive negotiations could begin in Q1 2026, with a deal potentially closing in Q2 2026.  

 

However, some sources caution that a deal is not guaranteed, and Coca-Cola may ultimately decide against proceeding with the sale.  

 

The Costa Coffee brand was founded in 1978 by the Italian Costa brothers, initially focusing on slow-roasted Arabica beans. In its early days, the company primarily supplied coffee beans to Italian restaurants in London’s West End, with annual sales under 10 tons.  

 

In 1981, the Costa brothers opened their first coffee shop in London. With support from family and friends, Costa expanded at a rate of two new stores per year.  

 

In 1995, British hotel chain Whitbread acquired Costa for £19 million, when it had just 39 stores. Under Whitbread’s backing, Costa embarked on an aggressive expansion.  

 

In the European market, Costa grew rapidly, particularly across the British Isles, where it once opened a new store every four days at its peak. By 2010, Costa had surpassed 1,000 stores, becoming the coffee chain with the most locations in the UK.  

 

In 2011, Whitbread planned to spin off Costa through an IPO but delayed the move due to the European debt crisis. When Whitbread revisited the spin-off in 2017, it coincided with Coca-Cola’s interest in entering the coffee sector. Ultimately, in 2018, Whitbread opted to sell Costa to Coca-Cola for £3.9 billion.  

 

Seven years later, market rumors suggest Costa’s valuation now ranges between £2 billion and £2.5 billion, representing just 51%-64% of Coca-Cola’s original acquisition price.  

 

In a parallel development, Starbucks is also exploring the sale of a portion of its stake in China.

 

If both Costa and Starbucks China ultimately proceed with their sales, it would undoubtedly mark a significant reshuffling of the global coffee market landscape.