Apollo Explores Costa Acquisition from Coca-Cola (KO)

The Coca-Cola Company (NYSE:KO) is one of the best long-term stocks to invest in according to Warren Buffett. On August 27, Apollo Global Management entered early-stage talks with Coca-Cola’s advisers about a potential acquisition of Costa Coffee. While discussions are ongoing, formal bids are not expected for several weeks, and Apollo may ultimately opt out of making an offer.

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KKR has also reportedly engaged with Lazard, Coca-Cola’s adviser in the sale process, but is unlikely to submit a bid. Coca-Cola is still in the initial phase of exploring divestment options for Costa, which it currently owns, as interest from private equity firms begins to surface.

Costa Coffee operates over 4,000 stores in more than 50 countries, including over 2,700 outlets in the UK and Ireland. Coca-Cola acquired it in 2018 for over $5 billion. The goal was to strengthen Coca-Cola’s presence in the global coffee market and to diversify away from sugary soft drinks. However, Costa has faced operational challenges, including rising costs for coffee beans, labor, and real estate, as well as increasing competition from premium coffee brands. Despite some revenue growth, profitability has been under pressure, with Costa reporting a pre-tax loss of £9.6 million in 2023, following a profit of £245.9 million in the prior year.

The Coca-Cola Company (NYSE:KO) is a global beverage manufacturer. It produces and markets nonalcoholic drinks including soft drinks, juices, teas, coffees, and water under more than 200 brands such as Coca-Cola, Sprite, Fanta, and Minute Maid. The company operates in over 200 countries through a franchise bottling system.

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Disclosure: None. This article is originally published at Insider Monkey.