Coca-Cola Buys Costa Coffee in a £3.9 Billion Deal

Costa Coffee will return most of the proceeds from the Coca Cola to shareholders

Costa Coffee will return most of the proceeds from the Coca Cola to shareholders

The coffee shop to hotels group said earlier this year that it would split Costa and list it as a separate entity, following pressure from activist investor Elliott.

Costa, which is now owned by Whitbread, is being sold for £3.9 billion ($5.1 billion).

Whitbread's chief executive Alison Brittain said the group will now focus on its Premier Inn hotel chain in the United Kingdom and Germany. Since then, Costa has grown from just 39 shops to become the biggest coffee firm in Britain.

The two companies said on Friday that Coke, one of the biggest soft drinks groups in the world, would buy Costa's nearly 4,000 outlets across markets such as Britain, Europe and China after Whitbread's board unanimously backed the deal.

Whitbread said it will reduce debt and contribute to the pension fund with the proceeds from the deal and further expand its hotel chain Premier Inn in the United Kingdom and Germany.

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Costa gives Coca-Cola a global coffee footprint with almost 4,000 retail outlets in more than 30 countries.

"Coca-Cola doesn't have a broad, global portfolio in this growing category", Quincey said, highlighting Costa's retail footprint, roastery, supply chain and Costa Express vending system, which the company plans to expand.

"Whitbread, which also owns budget hotel chain Premier Inn, said that its board had unanimously approved the deal, and that it expects the sale to be completed by the first half of 2019". The spin-off would have taken up to two years, the company had said.

"Its global reach should turbo-charge growth in the years to come, and hot drinks are one of the few areas of the wider beverages sector where the soft drinks giant doesn't have a killer brand". It will give Coca-Cola (KO) "a strong coffee platform across parts of Europe, Asia Pacific, the Middle East and Africa, with the opportunity for additional expansion", Coca-Cola said in a statement. The company will return most of the proceeds to its shareholders, it said.

For Costa, Hyett said Costa will get "lots of care and attention" from Coca- Cola. "I'd like to welcome the team to Coca-Cola and look forward to working with them".

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