TDR Capital, the private equity owner of Asda, is reportedly evaluating a bid for Costa Coffee as Coca-Cola considers divesting the UK’s largest high street coffee chain, according to the Financial Times.

The London-based investor, which acquired a 67.5% stake in supermarket chain Asda last year, is among a small group of private equity firms in early discussions. Apollo Global Management, owner of Wagamama’s parent The Restaurant Group, and U.S. buyout firm KKR have also held initial talks with Lazard, Coca-Cola’s adviser on the sale.

Coca-Cola purchased Costa from Whitbread in 2018 for £3.9bn. However, weaker performance in the UK has weighed on results, with the drinks company reporting a 3% decline in coffee sales last year. “Costa has not quite delivered and is not where we wanted it to be from an investment hypothesis point of view,” Coca-Cola CEO James Quincey said on the company’s second-quarter earnings call.

The potential sale marks the latest shift in Coca-Cola’s coffee strategy as it reassesses growth opportunities in the category. For TDR, it would represent a renewed interest in Costa, having previously considered acquiring the chain through its EG Group forecourt business in 2018.

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