A small number of suitors have served up initial bids for Costa Coffee as the chain’s owner, The Coca-Cola Company, prepares to retain ownership of the brand’s ready-to-drink portfolio.
Sky News understands that Coca-Cola and its advisers set a deadline last week for indicative offers for Costa.
City sources said on Monday that Apollo Global Management, the investment giant which had expressed an interest in the business, decided not to submit an offer.
Other reported bidders include TDR Capital, the owner of Asda, although banking insiders said there had been a small number of proposals than expected.
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One suggested that the value placed on Costa could be as low as £1.5bn, well under half the £3.9bn paid by Coca-Cola in 2021.
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It was unclear whether Coca-Cola would be prepared to offload the business at that price.
The American drinks behemoth is said to have told suitors that it would retain control of the ready-to-drink Costa range sold in supermarkets and other grocery outlets.
Sky News revealed last month that Coca-Cola was exploring a disposal of Costa, which trades from more than 2,000 stores in the UK and well over 3,000 globally.
It has been reported to have a global workforce numbering 35,000, although Coca-Cola has not responded to any questions from Sky News about the Costa business or sale process.
Accounts filed at Companies House for Costa show that in 2023 the coffee chain recorded revenues of £1.22bn.
While this represented a 9% increase on the previous year, it was below the £1.3bn recorded in 2018, the final year before Coca-Cola took control of the business.
Coca-Cola has been grappling with the weak performance of Costa for some time, with Coca-Cola boss James Quincey saying on an earnings call in the summer: “We’re in the mode of reflecting on what we’ve learned, thinking about how we might want to find new avenues to grow in the coffee category while continuing to run the Costa business successfully.
“It’s still a lot of money we put down, and we wanted that money to work as hard as possible.”
The deal was intended to provide Coca-Cola with a global platform in a growing area of the beverages market.
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Costa trades in dozens of countries, including India, Japan, Mexico and Poland, and operates a network of thousands of coffee vending machines internationally under the Costa Express brand.
The chain was founded in 1971 by Italian brothers Sergio and Bruno Costa.
It was sold to Whitbread for £19m in 1995, when it traded from fewer than 40 stores.
Apollo declined to comment.
