Costa Coffee sold by Whitbread to Coca Cola in £3.9b deal

31 August 2018 by
Costa Coffee sold by Whitbread to Coca Cola in £3.9b deal

Whitbread have confirmed it will sell off their Costa Coffee empire to the Coca-Cola company in a deal valued at £3.9b.

Agreed unanimously by the Whitbread board, the deal is worth 16.4 times the Costa's EBITDA for 2018. When the company acquired the chain in 1995 it held just 39 outlets and was valued at £19m.

The sale marks Coca-Cola's first foray into the global hot drink sector.

Private equity groups were already known to have been circling Costa Coffee after Whitbread announced it would be spun off from its hotel business in April. The move was reportedly urged by the company's largest investor Elliott Advisors.

Those believed to have approached Whitbread regarding a buyout of the firm at the time included Bain Capital, CVC and TPG.

Alison Brittain, Whitbread chief executive, said: "I am delighted that we have agreed the sale of Costa to Coca-Cola for £3.9b. 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.

"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 will also reduce debt and make a contribution to its pension fund, which will provide additional headroom for the expansion of Premier Inn."

In a statement James Quincey, Coca-Cola president and CEO, said the expansion gave the soft drink company "new capabilities and expertise in coffee" and that their system could "create opportunities to grow the Costa brand worldwide".

He added: "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."

Get The Caterer every week on your smartphone, tablet, or even in good old-fashioned hard copy (or all three!).

The Caterer Breakfast Briefing Email

Start the working day with The Caterer’s free breakfast briefing email

Sign Up and manage your preferences below

Check mark icon
Thank you

You have successfully signed up for the Caterer Breakfast Briefing Email and will hear from us soon!

Jacobs Media Group is honoured to be the recipient of the 2020 Queen's Award for Enterprise.

The highest official awards for UK businesses since being established by royal warrant in 1965. Read more.

close

Ad Blocker detected

We have noticed you are using an adblocker and – although we support freedom of choice – we would like to ask you to enable ads on our site. They are an important revenue source which supports free access of our website's content, especially during the COVID-19 crisis.

trade tracker pixel tracking