Coca-Cola scraps sale of Costa after offers fall short: report
Coca-Cola has abandoned its plans to sell UK coffee chain Costa after offers from various private equity firms fell short of evaluations.
The Financial Times reports that the US beverage giant ended talks with bidders in December, halting a months-long sales process.
“This is not a good look given the speculated sale price was already half what Coca-Cola paid in 2018. The coffee chain hasn’t worked for Coca-Cola, yet the parent company will be reluctant to sell it for beans,” said Dan Ashworth, Investment Analyst at AJ Bell.
He noted that we are now in an era where companies are focusing on what they do best, and for Coca-Cola that means fizzy drinks rather than lattes.
“Higher staffing costs and a spike in raw material prices have put pressure on Costa. At the same time, competition has heated up, and consumers have become wary about spending money on casual items like a coffee.
“It always felt like Costa was low down the priority list for Coca-Cola, left to go cold like an undrunk cappuccino. It will now have to give the brand more love if it is to stand any chance of getting a more reasonable takeover offer.”
Data published by the British Retail Consortium this week shows that the UK continues to face a tight retail environment. Consumer spending remains cautious, with households squeezed by the rising cost of living, the group said.
“Now is the time to support struggling families with the cost of food and essentials and give the economy the boost it needs.
From business rates to the implementation of the Employment Rights Act, there are plenty of opportunities for the government to mitigate costs for retailers and prices for customers,” she said.
