Pricing Disputes Endanger Coca-Cola's Intended Sale of Costa Coffee
In a surprising turn of events, the planned divestment of Costa Coffee by beverage titan Coca-Cola is now in jeopardy. Negotiations with TDR Capital, initially identified as the preferred buyer, have stumbled over pricing disagreements. This transaction holds significant implications for both corporations involved, particularly given Coca-Cola's original $5 billion acquisition of the coffee chain in 2018 and the anticipated $2.5 billion from its sale. A definitive announcement regarding the deal's continuation or termination is expected in the coming week, poised to reshape the strategic paths of these prominent entities.
Crucial Talks Unravel for Coca-Cola's Costa Coffee Sale
On December 14, 2025, a critical juncture has been reached in the prospective sale of Costa Coffee, as intensifying pricing disputes cast a shadow over the agreement between The Coca-Cola Company and private equity firm TDR Capital. The Financial Times has brought to light that TDR Capital, the proprietors of Asda, had emerged as Coca-Cola's favored suitor following a pivotal board meeting held in New York. Despite this initial alignment, the transaction now faces imminent collapse. Coca-Cola is slated to render a decisive verdict next week on whether to proceed with or terminate the sale process. The existing framework for the deal permitted Coca-Cola to retain a minor stake in Costa; however, discussions are reportedly underway to potentially augment this stake to salvage the agreement. With an initial target of recouping around $2.5 billion from the sale of Costa—a brand secured for approximately $5 billion from Whitbread in 2018—the current impasse presents a substantial challenge. Further complicating matters, Costa Coffee has contended with formidable competition from both independent establishments and large-scale rivals, coupled with escalating operational expenses, leading to a reported annual loss of £13.8 million on revenues of £1.2 billion in 2023. While TDR Capital, co-owner of EG Group, expressed interest in acquiring Costa's operations in the UK and internationally (excluding China), other significant bidders such as Bain Capital, Centurium Capital, Apollo, and KKR have since withdrawn their interest, narrowing the field considerably. The potential dissolution of this sale could lead to considerable repercussions for both Coca-Cola, by forfeiting a chance to recover a significant portion of its original investment, and for Costa Coffee, by hindering its access to crucial capital for navigating a highly competitive market environment.
This situation underscores the complexities inherent in large-scale corporate divestitures, where the nuanced interplay of valuation, market conditions, and strategic objectives can profoundly influence outcomes. For businesses observing these developments, it serves as a potent reminder of the importance of robust negotiation and flexible deal structures in overcoming unforeseen obstacles. It also highlights the persistent challenges faced by legacy brands in adapting to dynamic consumer preferences and competitive pressures within the global marketplace.