Coca-Cola Taps Lazard to Explore Sale of $5B Costa Coffee - Indicative Bids Due Early Autumn

Coca-Cola (NYSE: KO) is reviewing strategic options for Costa Coffee and has brought in Lazard (NYSE: LAZ) to run the process, according to people familiar with the matter. The review includes the possibility of a sale; talks have reportedly started with a small group of potential buyers, including private equity firms.

Indicative bids are expected in early autumn, though a transaction is far from certain. Costa was bought by Coca-Cola in 2018 for just over $5 billion as the soft-drinks giant tried to bulk up in coffee and go after chains such as Starbucks (NASDAQ: SBUX) and Nestlé (SIX: NESN).

Management has signaled that Costa hasn't met the original investment thesis. CEO James Quincey has said the company is re-evaluating how it participates in the coffee market while continuing to operate Costa. In plain English: the experiment didn't pan out the way executives had hoped, and now they're weighing next steps.

From a market perspective, this would be another big move in the ongoing flurry of dealmaking across packaged food and beverage names - a sector where buyers and sellers are reshuffling to deal with inflationary pressure and shifting consumer tastes. Costa operates in roughly 50 countries, so any sale would be a sizeable cross-border asset play.

For now, the calendar to watch is early autumn, when indicative offers are expected to arrive. Whether Coca-Cola holds on, restructures, or sells remains an open question - and one that will likely spur active trading interest while the process plays out.

Quick reminder: Costa cost Coca-Cola a bit over $5 billion in 2018 and has footprints in about 50 countries. That's the headline number to keep in your back pocket.