Coca Cola buys Costa Coffee for £3.9bn

By Georgia Bronte contact

- Last updated on GMT

Coca Cola buys Costa Coffee for £3.9bn

Related tags: Coffee, Drinks, Hot drinks

Whitbread PLC has sold its chain of Costa Coffee shops to Coca Cola for £3.9 billion to focus on growing its other brands.

The sale of the coffee chain follows the decision made by Whitbread in April to spin the brand off from the rest of its business. The demerger was intended to allow Costa and the hospitality group's other brands - including Premier Inn - to “thrive as independent companies”.

The company says that the acquisition will allow for more product development for the brand, as it will give Coca Cola access to the hot beverage sector, which is a market in which Coca Cola does not currently operate a global brand.

Coca Cola’s global presence, distribution and vending platform will allow for further Costa growth.

The deal will also allow Whitbread to reduce debt, and it will make a contribution to its pension fund.

Following the deal, Whitbread saw its shares surge 18%, and it says that a significant majority of net cash proceeds will be returned to shareholders.

“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,” says Alison Brittain, chief executive of Whitbread.

“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 bought the company in 1995 when it comprised just 39 shops. It now operates around 4000 shops in 32 countries.

It is the UK’s largest hospitality company and also owns the Beefeater, Bar + Block and Brewers Fayre restaurant and pub brands




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