Costa Coffee sale hit as KKR withdraws from bidding process

Potential bidders for Costa Coffee have begun to fall away, with private equity firm KKR withdrawing its interest in acquiring the chain from CocaCola. The decision comes just days before indicative offers for the coffee business are due, raising questions about the appetite for a deal at the price CocaCola originally paid.

KKR, listed in New York, was among the first groups to show interest when CocaCola put Costa up for sale earlier this year. However, sources now confirm that KKR will not proceed with an offer for the high street coffee giant. Costa Coffee, founded in London in 1971, operates more than 2700 shops across the UK and Ireland, with a further 1300 locations internationally. Its presence stretches to over 14200 express coffee machines in Britain, highlighting both its reach and the logistics of a potential sale.

CocaCola acquired Costa from Whitbread in 2018 for £39 billion. This historic price now appears optimistic, with several city analysts suggesting the drinks giant is unlikely to recoup its investment in the current market. Chief executive James Quincey acknowledged earlier this year that Costa has not met internal targets for financial returns and is not performing as anticipated.

Other private equity groups, including TDR and Bain, are understood to remain interested, while Centrium Capital—the owner of Luckin Coffee in China—is reportedly considering a bid. However, with major players such as Apollo Global Management and now KKR stepping away, the competitive tension around the process may have diminished.

Whitbread initially acquired Costa in 1995 for approximately £20 million, at a time when the brand operated only 39 shops. The company later faced activist investor pressure to spin the business out, eventually agreeing to the sale to CocaCola. Since then, Costa has attempted to expand both in the United States and internationally, with mixed success relative to initial ambitions.

City sources remain sceptical that CocaCola will achieve its original sale expectations if the process continues. Both CocaCola and its advisers at Lazard declined to comment on the current status of negotiations or future prospects for the Costa brand within or outside the global drinks portfolio.