KKR makes surprise move to brew up Costa Coffee bid

The American concern elephantine KKR has made a astonishment determination to bargain Costa Coffee, 1 of Britain's biggest precocious thoroughfare hospitality groups.

Sky News has learnt that KKR is among a tiny fig of parties successful talks with The Coca-Cola Company and its advisers astatine Lazard, the concern bank, astir a deal.

KKR's engagement successful the process is unexpected due to the fact that it had appeared to driblet its involvement successful a imaginable bid successful precocious August, soon aft quality of the auction was revealed by Sky News.

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Further details of KKR's connection were unclear connected Monday, though 1 root said its involvement remained fluid, and it was imaginable that it could inactive determine against a binding connection oregon take to squad up with different party.

It joins rival bidders including Bain Capital, the part-owner of bakery concatenation Gail's, and TDR Capital, whose portfolio includes Asda.

Sources said that absorption presentations with imaginable bidders were owed to get underway this week.

Coca-Cola intends to clasp ownership of Costa's ready-to-drink portfolio, which is besides sold done different retailers.

Further bids for the concern are understood to beryllium owed shortly.

One insider has suggested that the worth placed connected Costa could beryllium arsenic debased arsenic £1.5bn, good nether fractional the £3.9bn paid by Coca-Cola successful 2021.

It was unclear whether Coca-Cola would beryllium prepared to offload the concern astatine that price.

Costa trades from much than 2,000 stores successful the UK and good implicit 3,000 globally.

It has been reported to person a planetary workforce numbering 35,000, though Coca-Cola has not responded to immoderate questions from Sky News astir the Costa concern oregon merchantability process.

Accounts filed astatine Companies House for Costa amusement that successful 2023 the java concatenation recorded revenues of £1.22bn.

While this represented a 9% summation connected the erstwhile year, it was beneath the £1.3bn recorded successful 2018, the last twelvemonth earlier Coca-Cola took power of the business.

Coca-Cola has been grappling with the anemic show of Costa for immoderate time, with Coca-Cola brag James Quincey saying connected an net telephone during the summer: "We're successful the mode of reflecting connected what we've learned, reasoning astir however we mightiness privation to find caller avenues to turn successful the java class portion continuing to tally the Costa concern successfully."

"It's inactive a batch of wealth we enactment down, and we wanted that wealth to enactment arsenic hard arsenic possible."

The woody was intended to supply Coca-Cola with a planetary level successful a increasing country of the beverages market.

Costa trades successful dozens of countries, including India, Japan, Mexico and Poland, and operates a web of thousands of java vending machines internationally nether the Costa Express brand.

The concatenation was founded successful 1971 by Italian brothers Sergio and Bruno Costa.

It was sold to Whitbread for £19m successful 1995, erstwhile it traded from less than 40 stores.

KKR declined to comment.