Bain Capital intends to acquire Costa Coffee from Coca-Cola for $2.7 billion
Costa Coffee is the largest coffee chain in the UK and the second-largest globally after Starbucks. Founded in London over half a century ago, it has become a symbol of British coffee culture.
In 2018, Coca-Cola acquired Costa Coffee fr om Whitbread for £3.9 billion, viewing the brand as a strategic move in the hot beverage and "out-of-home consumption" segment. However, in recent years, the corporation has focused on its non-alcoholic business and decided to exit the coffee segment.
According to Financial Times sources, three players showed early interest in Costa Coffee: Bain Capital, TDR Capital (owner of the supermarket chain Asda), and Apollo Global Management. However, Apollo withdrew to focus on other assets.
Thus, Bain Capital remains the primary contender for the acquisition. The company manages assets worth approximately $185 billion, and its Special Situations division, established in 2018, actively invests in distressed and restructuring assets.
Bain already has experience in the retail and restaurant sectors: it is the controlling shareholder of Bread Holdings (owner of the bakery chain Gail’s) and was part of the consortium that acquired the PizzaExpress chain during the COVID-19 pandemic.
According to the latest available report for 2023, Costa Coffee reported a net loss of £13.8 million with revenue of £1.2 billion. Despite this, the brand maintains a strong position in the UK market, wh ere it operates over 2,800 coffee shops and is actively expanding its Costa Express vending machine network.
Experts believe Bain Capital's interest is linked not only to the potential recovery of the business post-pandemic but also to the prospects for further international expansion and digital transformation of the chain.
The global coffee shop market is showing signs of overheating, with increasing competition and shifting consumer preferences towards specialty coffee and delivery. In this environment, investors are seeking opportunities to restructure traditional chains by introducing new business models, including subscription services, takeaway coffee, and digital loyalty programs.
Experts note that for Bain Capital, the deal with Costa Coffee could be a strategic step in strengthening its portfolio of consumer brands and foodservice companies.
If the deal is approved by regulators, it will become one of the largest in the UK food and coffee shop sector in recent years.
"Costa Coffee remains a strong brand with a loyal customer base and growth potential in Europe and Asia. For Bain Capital, this is an opportunity to transform a classic brand into a modern digital business," analysts from FT note.
