In a significant reversal, the Coca-Cola Company has terminated its plans to sell the Costa Coffee chain after potential buyers, including the owner of Asda, failed to meet its asking price. The beverage giant has ended an auction process that lasted for several months.
The Sale Process Collapses
Coca-Cola brought talks with remaining bidders to a halt in December 2025, according to a report by the Financial Times. The company had been seeking approximately £2bn for the business, a figure nearly half of the £3.9bn it paid to acquire Costa from Whitbread in 2018.
The final round of negotiations involved private equity firms TDR Capital, which owns Asda, and Bain Capital Special Situations, the owner of Gail's Bakery and Pizza Express. Earlier in the process, other firms like Apollo, KKR, and Centurium Capital—the owner of China's Luckin Coffee—were also reportedly involved. The investment bank Lazard was handling the sale.
One proposed deal with TDR Capital would have seen Coca-Cola retain a minority stake in Costa. However, with offers coming in below expectations, the company decided to pull the plug. A source indicated to the FT that Coca-Cola would likely revive plans to sell the chain in the medium term.
Costa's Struggles Under Coke's Ownership
The decision coincides with a leadership change at Coca-Cola, with Chief Operating Officer Henrique Braun set to replace James Quincey as CEO in March 2026. Quincey, who will become executive chair, admitted last summer that Costa had "not delivered" for the parent company.
Since its acquisition six years ago, Costa has faced intense pressure. It is caught between competition from upmarket independent coffee shops and cheaper rivals like Greggs, as consumer spending remains subdued. The chain's financial performance has suffered as a result.
Costa's operating loss more than doubled to £13.5m in 2024, despite generating revenues of £1.2bn, according to filings at Companies House. The company blamed cheaper competitors and low footfall for the poor results.
Broader Challenges for the UK Coffee Market
The entire UK coffee shop sector is grappling with rising input costs. Higher prices for coffee beans and increased staffing costs, partly attributed to the rise in employers' National Insurance in April 2025, have squeezed margins across the industry.
The failure to secure a sale may now force Coca-Cola to write down the value of Costa on its balance sheet. This follows a similar move within Costa's Express self-serve machine business, which wrote down the value of its assets by £51m last year after discontinuing certain prototypes.
With 2,700 branches across the UK and Ireland, Costa remains a major player, but its future ownership and strategy are now back under Coca-Cola's direct control as it navigates a challenging market.
