Whitbread to sell Costa to Coca-Cola for £3.9 billion
Whitbread has agreed to sell its Costa coffee chain to The Coca-Cola Company in a £3.9 billion deal.
With the transaction expected to complete in the first half of 2019, the sale is subject to the approval of Whitbread’s shareholders as well as anti-trust approvals.
The company said the proceeds from the sale are expected to be around £3.8 billion once transaction and separation costs are taken into account. In addition, a significant majority of the money raised through the sale is expected to be returned to Whitbread shareholders.
Whitbread will also use the funds to reduce debt and make a contribution to its pension fund, which will both provide headroom for further expansion of its Premier Inn brand in the UK and Germany. It will also retain its 49% investment in Pure, a London-based healthy-eating quick service restaurant business with 15 stores.
As part of the transaction, Dominic Paul will remain as Costa managing director but will step down from the Whitbread executive committee.
Alison Brittain, Whitbread chief executive, said: “I am delighted that we have agreed the sale of Costa to Coca-Cola for £3.9 billion. 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.”
Costa was acquired by Whitbread for £19 million in 1995 when it had 39 shops. It now has over 2,400 coffee shops in the UK and over 1,400 stores in more than 30 international markets. It also operates the Cost Express self-serve business, Costa Express.
James Quincey, Coca-Cola president and chief executive, said: “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.”
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