Coca-Cola to acquire Costa coffee brand in £3.9bn deal
Costa is set to be acquired by The Coca-Cola Company in a deal that values the coffee brand at £3.9bn.
Leisure group Whitbread, which currently owns Costa, has announced that its board unanimously agrees with the sale to Coca-Cola.
Whitebread acquired Costa in 1995 for £19m when the brand only operated 39 stores.
The transaction is expected to generate net cash proceeds of approximately £3.8bn at completion, after adjusting for estimated transaction costs and separation costs.
Once the deal is complete, Whitbread is set to focus on the structural growth opportunities for its hotel business, Premier Inn, in the UK and Germany.
Alison Brittain, Whitbread Chief Executive, said: “I am delighted that we have agreed the sale of Costa to Coca-Cola for £3.9bn. This transaction is great news for shareholders as it recognises the strategic value we have developed in the Costa brand and its international growth potential and accelerates the realisation of value for shareholders in cash.
“The announcement today represents a substantial premium to the value that would have been created through the demerger of the business and we expect to return a significant majority of net proceeds to shareholders. Whitbread will also reduce debt and make a contribution to its pension fund, which will provide additional headroom for the expansion of Premier Inn.
“This has resulted in this unique strategic opportunity to combine the Costa brand with Coca-Cola’s global scale, product and distribution capabilities. This combination will ensure new product development, continued growth in the UK and more rapid expansion overseas.”
James Quincey, Coca-Cola President and CEO, 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.”
