KKR joins Bain and TDR in £1.5bn auction for Costa Coffee UK bid

According to sources, KKR has reignited its interest in acquiring Costa Coffee, reappearing in negotiations alongside private equity rivals Bain Capital and TDR Capital with The Coca-Cola Company. The renewed approach marks a significant shift in a sale process that could price bids near £1.5bn.

Advisers expect management presentations to start imminently as Coca-Cola fields offers for the chain. Insiders say the beverage group will keep the brand’s bottled and canned business sold through supermarkets and convenience outlets — the so-called ready-to-drink (RTD) portfolio — while exploring a buyer for the retail store estate.

Costa operates more than 2,000 UK stores and in excess of 3,000 sites worldwide, employing roughly 35,000 people. The chain reported revenue of about £1.22bn in 2023, an increase of around 9% year-on-year, though performance has yet to fully recover to pre-2021 levels following Coca‑Cola’s acquisition.

For context, Coca‑Cola paid roughly $5bn for the business in 2021 — a benchmark that highlights how valuations for consumer-facing chains have shifted as private equity recalibrates expectations amid higher rates and softer multiples. The current auction price sits at less than half of that earlier figure, underscoring the compression in deal pricing for mgmt-heavy retail concepts.

Market participants say a sale to private equity would rank among the largest UK consumer transactions this year and would signal a broader trend: owners separating branded FMCG lines from physical retail footprints to unlock value. If a PE buyer acquires Costa’s store operations, potential value creation levers include lease renegotiations, menu and format refreshes, and accelerated international rollouts in select markets.

From Coca‑Cola’s perspective, retaining the RTD business keeps control of a fast-growing grocery channel and protects a global beverages pipeline. CEO James Quincey has publicly acknowledged the need to reassess strategy in coffee, seeking routes to scale the category while ensuring Costa is managed effectively — a strategic balancing act between brand ownership and capital allocation.

Historically, Costa was founded in 1971 and scaled through successive ownership changes, including a 1995 sale to Whitbread for a modest sum. Today’s process pits experienced buyout firms against each other in a testing market for consumer assets. How the auction finishes will be watched closely by investors tracking European food & beverage buyouts, where operational complexity and real-estate exposure are testing private equity underwriting models.