KKR has made a renewed bid for Costa Coffee, joining Bain Capital and TDR Capital in talks with The Coca-Cola Company over the sale of one of Britain’s largest coffee chains.

According to Sky News, KKR is in discussions with Coca-Cola and its adviser Lazard about acquiring Costa, after initially stepping away from the process in August. The private equity firm’s renewed interest marks one of the most notable developments in the auction, which could see bids valued at around £1.5bn, less than half of the £3.9bn Coca-Cola paid for the business in 2021.

Coca-Cola intends to retain Costa’s ready-to-drink portfolio, which includes bottled and canned coffee products distributed through retailers. Management presentations for potential buyers are expected to begin this week.

Bain Capital and TDR Capital, owner of UK supermarket chain Asda, are also competing for the deal.

Costa Coffee operates more than 2,000 stores in the UK and over 3,000 globally, employing around 35,000 people. The company reported £1.22bn in revenue for 2023, up 9% year-on-year but still below pre-acquisition levels.

Coca-Cola CEO James Quincey has acknowledged Costa’s mixed performance since the 2021 acquisition, noting that the company is reassessing its coffee strategy to “find new avenues to grow in the category while continuing to run the Costa business successfully.”

Founded in 1971 by brothers Sergio and Bruno Costa, the chain was sold to Whitbread for £19m in 1995 before Coca-Cola’s $5bn purchase more than two decades later.

If completed, a sale to a private equity buyer would mark one of the UK’s largest consumer-sector transactions of the year and a significant step in Coca-Cola’s restructuring of its coffee portfolio.

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