Coca-Cola to Buy Coffee Chain Costa from Britain’s Whitbread Plc for £3.9 billion

Britain’s Whitbread Plc has agreed to sell its world’s second largest coffee chain Costa to Coca-Cola Co for an enterprise value of £3.9 billion, said in a statement on Friday (31).

The new deal is expected to pave a new way for Coca-Cola Co to move ahead with the new front, other than its traditional sodas.

Coca-Cola Co is expected to get almost 4000 coffee outlets in the UK and other European countries, according to the deal struck unanimously by the Whitbread board understanding the best interest of the shareholders.

Whitbread had been working to demerge its coffee business chain from its hotel chain. The company purchased Costa in 1995 for £19 million pounds when it was a small business chain with only 39 shops.

“A significant majority of net cash proceeds intended to be returned to shareholders. Whitbread will also reduce financial indebtedness and make a contribution to the pension fund, which will both provide headroom for further expansion of Premier Inn in the UK and Germany,” the company said in a release.

The transaction is expected to complete in the first half of 2019. Whitbread aims to focus on the attractive structural growth opportunities for its leading hotel business, Premier Inn, in the UK and Germany, the company added.

“Costa gives Coca-Cola new capabilities and expertise in coffee, and our system can create opportunities to grow the Costa brand worldwide. Hot beverages is one of the few remaining segments of the total beverage landscape where Coca-Cola does not have a global brand. Costa gives us access to this market through a strong coffee platform. I’d like to welcome the team to Coca-Cola and look forward to working with them,” said James Quincey, Coca-Cola President, and CEO commenting on the deal.