NEWS
31/08/2018 08:58 BST | Updated 31/08/2018 11:20 BST

Costa Coffee Sold To Coca-Cola For £3.9bn

Coca-Cola are planning to expand the brand globally.

Costa Coffee has been sold to Coca-Cola for £3.9 billion, it has been announced. 

Its current owners, Whitbread, are selling the chain in order to focus on their Premier Inn hotel business. 

At present there are over 2,400 Costa outlets and Coca-Cola have already stated plans to make the brand a global success. 

Coca-Cola president James Quincey 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. I’d like to welcome the team to Coca-Cola and look forward to working with them.”

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

A significant majority of net cash proceeds will be returned to shareholders.

PA Archive/PA Images
Costa also sells a range of coffee products in supermarkets 

Whitbread chief executive Alison Brittain said: “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.

“This combination will ensure new product development, continued growth in the UK and more rapid expansion overseas.”

Following the announcement, Whitbread shares soared nearly 20% in early morning trade, catapulting it to the top of the FTSE 100.

Whitbread acquired Costa in 1995 for £19 million, buying it from founders Sergio and Bruno Costa when it had only 39 shops.

The deal comes hot the heels of another big money acquisition in the sector.

Pret A Manger was earlier this year sold by Bridgepoint for £1.5 billion to a company controlled by JAB, the investment vehicle of Germany’s wealthy Reimann family.

Neil Wilson, chief market analyst at markets.com, said: “The price looks like investors will get more bang for their buck than they would have done with a simple demerger.

“However, the growth story needs to be looked at because Whitbread has decided to change tack, shifting away from a demerger that it said would let the coffee and hotel chains grow more rapidly in favour of a quick sale.

“Clearly Coca-Cola sniffed an opportunity to gain an attractive brand with a fast-growing global presence. It’s a pretty good return too on the £19 million Whitbread paid for the coffee chain over 20 years ago.”