Apollo Global Management, the owner of Wagamama’s parent The Restaurant Group, has entered early-stage talks with advisers to Coca-Cola regarding a potential acquisition of Costa Coffee, according to Sky News.

Coca-Cola, which acquired Costa from Whitbread in 2018 for £3.9bn, is considering a sale of the UK’s largest coffee chain as it seeks to reduce reliance on carbonated drinks. Sources said the process remains in its early stages, with indicative bids expected in the coming weeks. Apollo has not yet decided whether it will submit a formal offer.

Other private equity firms have also reviewed the opportunity, with KKR understood to have held discussions with Coca-Cola’s adviser Lazard but unlikely to proceed with a bid.

Costa operates more than 2,000 stores in the UK and over 3,000 globally, with an estimated 35,000 employees. Analysts suggest the business could fetch as little as £2bn in a sale, far below the £3.9bn paid by Coca-Cola seven years ago.

Costa reported £1.22bn in revenues for 2023, up 9% from the previous year but below its pre-acquisition performance in 2018. Rival chains include Starbucks, Caffè Nero, Pret A Manger, and Gail’s, which has also been exploring a sale.

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