Coca-Cola buys coffee chain Costa for 3.9 bn

Devin Lawrence
August 31, 2018

The board of British multinational Whitbread have unanimously agreed to a £3.9bn takeover of its Costa Coffee subsidiary by Coca-Cola, as it prioritises growth at its Premier Inn brand in the United Kingdom and Germany.

The company said the sale of the coffee chain will allow it to focus on its Premier Inn hotels business. Costa has close to 4,000 retail outlets worldwide and is described by Coca-Cola in its statement as having "highly trained baristas" and "state-of-the-art roastery". Costa is already the biggest coffee chain in the United Kingdom, and under Coca-Cola's reign, it could be set to get even bigger. Costa is Britain's biggest coffee company with over 2,400 coffee shops in the United Kingdom and another 1,400 in more than 30 countries. Coca-Cola CEO James Quincey said the Costa deal is a "serious and significant investment" in hot beverages, a market that still remains largely fragmented.

"Costa also provides Coca-Cola with strong expertise across the coffee supply chain, including sourcing, vending and distribution", the soft drinks giant added.

Coca-Cola has over 500 brands in its stable including Fanta, innocent smoothies and Powerade sports drinks.

Whitbread has owned Costa since 1995, when it bought it for just £19m.

The deal brings to an end Whitbread's history as a conglomerate in the leisure sector.

The company said net cash proceeds from the transaction are expected to be around £3.8 billion (Rs 35,100 crore), after deducting estimated transaction costs and separation costs. The Costa purchase is Coca-Cola's biggest push into operating stores, just as weak consumption in the United Kingdom leads a series of retailers such as BHS out of business.

RGA Takes Aim at Andrew Gillum in Florida
In an appearance on MSNBC's "Meet the Press Daily", Gillum told host Chuck Todd that the voters of Florida are "better than this". But in 2017, the Federal Bureau of Investigation issued subpoenas to the City of Tallahassee seeking development records.

Ariana Grande added to Aretha Franklin's funeral
At least 20 performers are scheduled to participate, including Stevie Wonder , Shirley Caesar, Faith Hill and Ariana Grande . Wright Museum of African American History in Detroit , Wednesday, Aug. 29, 2018.

Daniel Ricciardo: No bad blood with Red Bull
In a couple of months' or years' time. "But he will not be far from Max (Verstappen ) in pure speed in qualifying". Maybe it will help for next season if I'm to do Super Formula". "The competition between he and Max is intense".

Brittain suggests that the deal could see Costa made as easily available as a can or bottle of Coke, saying: "They [Coca-Cola] want the coffee product, they have no coffee in their range".

Proceeds of the deal will be used to pay down debt and boost the pension fund.

As of April, Whitbread was planning to slowly spin off Costa.

Whitbread's share price soared 14 percent.

"Coca-Cola are one of the few companies in the world that could justify the valuation", said Nicholas Hyett, equity analyst at Hargreaves Lansdown.

Hot beverages, he said, is one of "the few remaining segments of the total beverage landscape where Coca-Cola does not have a global brand".

Other reports by

Discuss This Article

FOLLOW OUR NEWSPAPER