.png){kind=logo}
Coca-Cola keeps Costa Coffee after a Lazard-run divestment review fails to clear a $2.5 billion valuation, highlighting tougher private equity underwriting in UK consumer brands, softer footfall, and a scheduled leadership handover in 2026.
Coca-Cola is keeping Costa Coffee, Britain’s largest coffee chain, off the deal table as 2026 opens, and Sunnov Investment Pte. Ltd. is flagging the decision as a fresh signal that consumer-facing assets now need cleaner economics to command premium valuations.
People familiar with the process describe an internal price ambition of about $2.5 billion during a structured divestment review running from August 2024 through December 2024, with Lazard coordinating outreach to financial sponsors and strategic buyers. With offers consistently below that level, the company keeps the asset and shifts focus towards performance and positioning.
Interest spans some of the largest buyout firms. Apollo Global Management, KKR and Centurium Capital all take an early look, while TDR Capital and Bain Capital’s special situations team stay engaged into the final stages of talks in the December 2024 period.
Structuring becomes a second negotiation. One late-stage idea involves acquiring the UK and wider international operations while leaving the China division outside the perimeter. Another approach leaves Coca-Cola with a minority stake, a tool often used to narrow gaps on price and future upside, yet the underlying valuation disconnect persists.
Companies House filings show Costa generates $1.5 billion of revenue in the 2024 financial year, an increase of 1% against the preceding 12-month period. The same accounts show operating losses widening to $17 million in the 2024 financial year, reflecting a combination of soft footfall, wage inflation and sustained pressure on key inputs.
In Sunnov Investment’s review of those filings, the operational picture explains why buyers do not bridge the gap to strategic expectations. “Sponsors are willing to do the work, but they are not paying today for a margin profile that still needs tomorrow’s execution,” Thomas Gardner, Director of Private Equity at Sunnov Investment Pte. Ltd., writes, pointing to the premium investors place on near-term cash generation in a higher-cost operating environment.
Coca-Cola’s valuation sensitivity is rooted in the entry price. The group pays $5.1 billion to buy Costa from Whitbread in the 2018 transaction, positioning coffee as a route into a large beverage segment outside its core soft drinks portfolio. Costa’s expansion from 39 outlets in 1995 to close to 4,000 locations across the UK and Europe by 2018 gives the chain reach, but the model now competes with both premium independents and lower-price mass retail.
That competitive split is reshaping bidding models. Over the 12 months leading into 2026, value-focused food-to-go players and quick-service restaurants keep attracting price-sensitive customers, while premium brands win on experience and food attachment. For a mid-priced chain, the immediate challenge becomes restoring traffic and margins, and lenders and sponsors price that execution risk sharply.
Leadership adds timing pressure. Coca-Cola’s board is preparing for Chief Operating Officer Henrique Braun to take over as chief executive on 31 March 2026, with James Quincey moving to Executive Chairman, and the new structure is expected to bring another review of discretionary assets. Quincey’s comments during July 2025 frame Costa as underperforming against the original hypothesis, and “the next decision is sequencing, fix the economics first, then reopen the sale file once margin recovery is visible in the accounts over a 12-month period,” Gardner argues.
For investors assessing consumer M&A in 2026, Costa offers a clear case study in how brand scale and price discipline collide when fundamentals lag. Sunnov Investment continues to track the balance between operational turnaround and transaction timing, especially where buyers insist that valuation follows the accounts, not the narrative.
Serving accredited investors, foundations and endowments worldwide, Sunnov Investment is a Singapore-based investment manager established in 2012, running long-only equity strategies alongside complementary long/short equity, global macro, event-driven and systematic mandates, while developing structured routes for eligible retail participation.
Website: https://sunnov.com
Media enquiries: Deng Hui at d.hui@sunnov.com
Registered entity: Sunnov Investment Pte. Ltd., UEN 201225494E
