Coca-Cola in Last-Ditch Talks to Salvage **Costa Coffee Sale** to TDR Capital Amid **Private Equity Coffee Deals** Surge

TDR Capital, a UK-based private equity heavyweight with £11 billion in assets under management, emerged as the frontrunner after a competitive auction process.[4] Known for retail turnarounds like Asda’s acquisition in 2020, TDR views Costa—boasting over 4,000 stores globally—as a platform for operational efficiencies, digital enhancements, and expansion into emerging markets.[2] Deal terms remain undisclosed, but sources suggest an enterprise value approaching £4-5 billion, reflecting **coffee chain M&A valuations** in a market trading at 10-12x EBITDA for premium brands.

Risks and Hiccups in **Costa Coffee Divestiture**

The talks, reported by the Financial Times on December 13, 2025, signal potential snags in finalizing financing, regulatory approvals, or commercial terms, prompting Coca-Cola’s “last-ditch” push.[2][4] Private equity **exit strategies in consumer brands** often falter on debt markets volatility; current high interest rates could pressure TDR’s leverage, targeting 5-6x EBITDA based on recent PE coffee deals like Carlyle’s investments in European chains.

• Financing Hurdles: TDR may need to syndicate debt amid tighter credit conditions for consumer-facing assets.
• Regulatory Scrutiny: UK CMA review likely, given Costa’s market share and TDR’s Asda ownership, probing vertical integration risks.
• Strategic Alternatives: Speculation swirls around alternative bidders, including China’s Luckin Coffee, amid its aggressive global push and dominance over Starbucks in Asia.[1]

**Private Equity Trends in Coffee M&A 2025**

The Costa auction exemplifies a broader **PE surge in coffee investments**, driven by resilient demand for premium, experience-driven formats. Bain & Company notes coffee as a top consumer subsector for buyouts, with deal volume up 25% YTD 2025, fueled by digital ordering and sustainability premiums.[1] Luckin Coffee’s Q2 2025 results—$1.72B revenue and $0.64 non-GAAP EPADS—highlight Asia’s disruption, pressuring incumbents like Starbucks (valued north of $10B in China alone) and positioning China players for **cross-border coffee chain acquisitions**.[1]

Implications for Stakeholders

For Coca-Cola shareholders, a successful close unlocks ~$5B in proceeds for debt reduction or buybacks, supporting a 3% dividend yield amid stable consumer staples valuations.[3] TDR gains a trophy asset in a fragmented market, with synergies from Asda’s footfall driving **private equity value creation in F&B**. Industry-wide, the deal signals consolidation, where PE firms like KKR and Carlyle eye similar plays amid **2025 M&A trends in beverages** favoring scalable chains over legacy soda assets.

Should talks collapse, Coca-Cola may pivot to a dual-track strategy—retaining Costa for cash-generative growth or relaunching auctions—while monitoring disruptors like Luckin, whose 24,000 stores and 119 new SKUs challenge Western models.[1]