Coca-Cola is holding last-ditch negotiations with private equity firm TDR Capital as it attempts to salvage the sale of Costa Coffee, after talks faltered over valuation, the FT reported on Saturday. 

TDR, the owner of Asda, was selected as Coca-Cola’s preferred bidder earlier this week following a board meeting in New York. However, discussions with Coca-Cola and its advisers have stalled, according to people familiar with the matter.

Coca-Cola is expected to decide next week whether to proceed with the transaction or shelve the sale entirely. The proposed structure could see Coca-Cola retain a minority stake in Costa, with the size adjusted to bridge the valuation gap.

The drinks group has been seeking roughly £2bn for Costa. It acquired the coffee chain from Whitbread for £3.9bn in 2018. Since then, the business has faced intensifying competition and rising costs.

Costa reported a £13.8m loss in 2023 on revenues of £1.2bn, according to filings at Companies House. Higher input costs, including coffee beans and labour, have weighed on performance.

Other private equity bidders included Bain Capital’s special situations unit and Centurium Capital. Apollo and KKR have both exited the process in recent months.

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