BRIEF: Luckin considers Blue Bottle bid in globalization, upmarket push

Luckin Coffee Inc. (LKNCY.US) is considering a bid for Nestlé SA’s (NESN.SW) Blue Bottle Coffee specialty coffee chain, according to people familiar with the matter cited by Bloomberg. The move would be aimed at enhancing Luckin’s brand profile outside China and expanding its presence in the premium coffee segment.

Reports last month had said that Luckin and its shareholder Centurium Capital were also evaluating a potential bidfor Costa Coffee, the British coffee chain owned by Coca-Cola Co. (KO.US). However, reports earlier this week indicated that Luckin and Centurium had exited that process, with private equity firm TDR Capital as the lead remaining bidder.

Founded in 2002 in the U.S., Blue Bottle Coffee is known for its focus on specialty hand-brewed coffee and high-end cafés. Nestlé acquired 68% of the company in 2017 for about $425 million. Reuters recently reported that Nestlé is reviewing strategic options to streamline its physical retail operations, including the potential sale of assets such as Blue Bottle. The brand currently has about 100 stores, mostly in the U.S., with other locations in South Korea, Hong Kong and in Mainland China.

People familiar with the discussions said talks remain at an early stage and may not result in a formal offer. The report added that Centurium is also evaluating other acquisition targets, including the operator of % Arabica coffee stores in China.

By Lee Shih Ta

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