Source: Coca-Cola is considering selling Costa Coffee
Coca-Cola (KO.N), the U.S. soft drinks company, is collaborating with investment bank Lazard to explore various options, including a possible sale, of the British coffee chain Costa, according to a source familiar with the situation who spoke to Reuters on Sunday.
Coca-Cola did not provide a comment when approached outside of regular business hours. Costa and Lazard have not yet provided a response to the requests for comment.
Initial discussions have taken place between the company and a select group of potential bidders for Costa, which includes private equity firms, as reported by Sky News, referencing unnamed sources.
Sky reported that indicative offers are anticipated in early autumn, though a sale is not guaranteed.
Coca Cola acquired Costa Coffee in 2018 for more than $5 billion to enhance its presence in the global coffee market, competing with Starbucks (SBUX.O) and Nestle (NESN.S).
The potential sale of Costa Coffee, which operates in 50 countries, would contribute to the ongoing trend of dealmaking in the packaged food sector. This industry has experienced significant growth as companies aim for scale to navigate the effects of price inflation and cater to consumers seeking healthier choices.
During an earnings call last month, Coca-Cola CEO James Quincey suggested potential changes to Costa’s operations, stating, “Our investment in Costa is not where we wanted it to be from an investment hypothesis point of view.”
“We are currently reflecting on our learnings and considering potential new avenues for growth in the coffee category, all while ensuring the continued success of the Costa business.”
In the United States, food companies are exploring healthier alternatives in response to Health Secretary Robert F. Kennedy Jr.’s Make America Healthy Again campaign. In July, Coca-Cola reached an agreement to incorporate real cane sugar in its products within the United States.
