Coca-Cola has reportedly abandoned plans to sell Costa Coffee after private equity bidders failed to meet its £2 billion asking price, ending a months-long auction that would have crystallised a substantial loss on the struggling UK coffee chain.

According to the Financial Times, the US soft drinks giant halted discussions with remaining bidders in December, according to people familiar with the matter. Coca-Cola had been seeking approximately £2 billion for Costa, roughly half the £3.9 billion it paid to acquire Britain's largest coffee shop chain from Whitbread in 2018.

TDR Capital, owner of Asda, and Bain Capital's special situations fund, which owns Gail's Bakery and PizzaExpress, were in the latter stages of talks. Private equity firms Apollo, KKR and Centurium Capital, backer of China's Luckin Coffee chain, were involved earlier in the process, which was handled by investment bank Lazard.

The decision comes as Coca-Cola's chief operating officer Henrique Braun prepares to replace James Quincey as chief executive officer in March, with Quincey moving to executive chair. One person familiar with Coca-Cola's thinking said the company could revive sale plans in the medium term.

Quincey told analysts last July that Costa had "not delivered" for Coca-Cola and was "not where we wanted it to be from an investment hypothesis point of view". The chain, which operates more than 2,700 branches across the UK and Ireland, has struggled to compete with upmarket independent coffee shops and cheaper operators such as Greggs during a period of subdued consumer spending.

Costa's operating loss more than doubled to £13.5 million on revenues of £1.2 billion in 2024, according to accounts filed at Companies House. The company blamed weak high street footfall and competition from value-led rivals.

UK coffee shops have since faced rising coffee bean prices and increased staffing costs, particularly through the rise in employers' national insurance that took effect in April last year. The failed sale process may force Coca-Cola to write down Costa's value on its books.

In 2024, Costa wrote down the value of its Chinese business by £48.6 million, attributing the move to weaker than expected demand at Shanghai coffee shops. Costa's Express business, which operates self-service machines, wrote down assets by £51 million last year after discontinuing certain prototypes.

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