Costa Coffee is being bought by Coca-Cola

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Coca-Cola is to buy the Costa Coffee chain from UK leisure group Whitbread in a £3.9bn deal that sets up the world’s biggest beverage maker to take on Starbucks, Nestlé and JAB Holdings in the global battle for coffee sales.

Whitbread, which also owns the Premier Inn hotel chain, had been planning to demerge Costa, but said the Coca-Cola arrangement offered a far higher price.

Shares in Whitbread surged almost 20% on the news, adding more than £1bn to the group’s stock market value, as analysts said the price was substantially higher than expected.

Whitbread’s chief executive, Alison Brittain, said the sale would allow the company to focus on Premier Inn.

“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,” she said.

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

For Coca-Cola, the transaction represents a leap into the global coffee market, where it has little presence. James Quincey, Coca-Cola president and chief executive, said Costa would give the company “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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