Benzingaยท2025-11-21 14:55Core Viewpoint - Luckin Coffee Inc. is reportedly in discussions for a $900 million loan to finance a bid for Costa Coffee, which is being sold by Coca Cola, aiming to significantly expand its global presence and challenge Starbucks [2][3][7]. Group 1: Acquisition Potential - Luckin Coffee is considering a bid for Costa Coffee, potentially in partnership with Centurium Capital, which would enhance its global footprint to over 33,000 stores across approximately 50 markets [2][3][4]. - The acquisition would allow Luckin to compete more effectively with Starbucks, which has 40,990 stores worldwide [5][6]. - Costa Coffee has around 4,000 stores in 52 countries, indicating a substantial addition to Luckin's current limited international presence [3][4]. Group 2: Financial Aspects - Luckin is in talks with banks for a $900 million loan to facilitate the acquisition, supported by its strong cash position of 8.57 billion yuan ($1.2 billion) at the end of September, a nearly 50% increase from the previous year [8][7]. - The potential deal values Costa at about 1 billion pounds ($1.3 billion), significantly lower than the 3.9 billion pounds Coca Cola paid for it in 2018 [7]. Group 3: Company Performance - Luckin reported a 50% year-on-year revenue increase to 15.3 billion yuan, with a 37% rise in store count to 29,214 by the end of September [14][18]. - Same-store sales for self-operated stores grew by 14.4% in the third quarter, marking a recovery from previous contractions [15][18]. - Despite revenue growth, Luckin's profit fell by 2.3% to 1.28 billion yuan, with net margins decreasing to 8.4% from 12.9% a year earlier [18]. Group 4: Market Context - Luckin's shares fell 2.1% following news of the potential Costa deal, although the stock is still up 46% for the year [13]. - The company is exploring options for relisting on the Nasdaq, although challenges remain due to its current OTC status following a major accounting scandal [11][12].