A buyout deal has reached an impasse.

Originally titled 'China Private Equity Investment' (ID: PE-China) By: Wei Yajun Photography: Bob KKR and Apollo have officially exited; the seller has prepared for the worst-case scenario. The buyer PE firm remains unwilling to compromise. Recently, according to foreign media reports, Coca-Cola’s proposed sale of its subsidiary Costa Coffee is currently stuck in a final price standoff. The transaction’s outlook remains highly uncertain, with risk of collapse at any moment. Coca-Cola’s target price stands at £2.1 billion (approximately RMB 19.8 billion), while the lead bidder—UK-based private equity firm TDR Capital—has offered £2.03 billion, leaving a gap of £70 million. Negotiations are now in their ‘final 48 hours’ countdown (though this deadline has already been extended by several days). TDR Capital is a UK private equity firm founded in 2002, specializing in control-oriented investments in European mid-market companies. It manages approximately £12 billion in assets and has completed 48 control acquisitions over the past two decades, exiting 31 of them. Initially, the seller refused to accept an earn-out arrangement. Negotiations stalled for three hours. At around 6 p.m. local time in London on December 13, Coca-Cola CFO Nik Jhangiani and TDR Capital Managing Partner Manjit Dale had been locked in a three-hour standoff inside a small conference room at Claridge’s Hotel in Mayfair, London—a room furnished with only eight chairs. The core of the negotiation fit onto a single A4 sheet: price. According to negotiation minutes obtained by the Financial Times, TDR’s latest offer comprises £1.83 billion in cash for Costa’s UK and international businesses, plus an earn-out of up to £200 million payable over three years—bringing the total consideration to no more than £2.03 billion. Coca-Cola’s minimum acceptable price, however, is ‘no less than £2.1 billion in cash, with no earn-out component.’ This is intriguing: in commercial transactions, if the seller retains confidence in the target’s future performance, such an inflexible demand would be unusual. Though the £70 million gap represents only about 4% of the asking price, it translates into roughly RMB 660 million. In the harsh winter of 2025—marked by high interest rates and leveraged financing costs nearing 8%—this sum alone is sufficient to prompt any PE firm to rebuild its financial model from scratch. No wonder TDR Capital has remained resolute in refusing to budge. Coca-Cola subsequently proposed an earn-out arrangement—but failed to sway TDR Capital. Even thornier is the ‘equity retention’ clause. Originally, Coca-Cola was willing to retain a 15% minority stake to continue benefiting from Costa’s network in overseas airports and highway service areas. TDR insisted on capping Coca-Cola’s retained stake at 10%, and required that Coca-Cola refrain from selling down its stake for 18 months post-closing—to avoid secondary market pressure. To break the deadlock, Coca-Cola proposed a ‘tiered equity’ structure at 1 a.m. on December 14: 1. Retain 12% equity at closing; 2. If Costa achieves EBITDA exceeding £220 million in FY2026, Coca-Cola may increase its stake by another 3%, bringing its total holding to 15%; the purchase price for this incremental stake would be calculated at 12x EBITDA; 3. If Costa’s EBITDA falls below £180 million, TDR would have the right to repurchase half of Coca-Cola’s stake—at the original price—i.e., 6%.

Coca-Cola slashes Costa Coffee’s asking price by half—but temporarily withdraws the sale | IIR

Institutional Investor Review (IIR): Capital for Good • Professional Rigor • Warmth & Conviction Published by: Institutional Investor Review (IIR) Respect original content; plagiarism strictly prohibited. Violators will be held accountable. For reprint authorization or business cooperation, please contact us via our official backend. IIR’s backup WeChat account: IIR_Backup Since last August, when news first emerged that Coca-Cola was working with investment banks to evaluate a potential sale of Costa Coffee—the brand it acquired in 2018 for £3.9 billion—the company has now formally announced its latest decision regarding the transaction. Coca-Cola CFO John Murphy, speaking to Bloomberg on Tuesday, stated that the company has decided to retain full ownership of Costa Coffee and will focus solely on improving its performance. Murphy noted that Costa Coffee performs well in certain core markets, but its China operations have proven more challenging than anticipated. Significantly, he added that Coca-Cola has not yet made any decision regarding Costa’s exit from the Chinese market: “We will closely monitor Costa’s China operations throughout 2026.” Based on comprehensive research and synthesis by IIR, Costa Coffee was founded in London in 1971 by Italian brothers Sergio Costa and Bruno Costa—initially as a wholesale roaster supplying restaurants and cafés. Its first branded café opened in 1978 (some sources cite 1981). In 1995, the brothers sold Costa Coffee to Whitbread—the UK’s largest hotel and café operator (owner of Premier Inn)—for £19 million. At the time, Costa operated around 40 outlets across the UK. Thereafter, Costa pursued multiple global acquisitions and entered the Chinese market as early as 2006 (Starbucks entered China in 1999). By 2007, Costa had overtaken Starbucks to become the UK’s largest café chain. In 2018, under pressure from shareholders including Elliott, Whitbread began divesting Costa Coffee. In early 2019, Coca-Cola completed its acquisition of Costa Coffee for approximately USD 5 billion (£3.9 billion), placing high hopes on the brand. Soon after, Costa’s UK operations suffered significant setbacks due to pandemic-related restrictions and the rise of independent cafés. In August last year, UK broadcaster Sky News first reported that Coca-Cola was evaluating a sale of Costa Coffee and had initiated preliminary discussions with private equity firms. Subsequent reports by the Financial Times and other financial media indicated Coca-Cola sought around £2 billion for Costa—nearly halving its original acquisition price. While numerous firms initially expressed interest, by year-end only TDR Capital and Bain Capital remained in the running.

Coca-Cola looks to sell Costa Coffee, Semafor reports

21 hours ago

Coca-Cola is reportedly attempting to sell Costa Coffee again after prior offers fell short of valuation expectations. The beverage giant originally purchased the British chain for $5.1 billion in 2018 to expand into healthier drink categories.

reuters

2026-10-08

Coca-Cola looks to sell Costa Coffee, Semafor reports

Coca-Cola looks to sell Costa Coffee, Semafor reports

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