Whitbread agrees £3.9bn sale of Costa to Coca-ColaAug 31, 2018
The board of the Dunstable-based plc have unanimously
Agreed that the deal is in the best interests of shareholders but the deal depends on shareholder approval.
The sale recognises Costa’s brand strength and international growth potential. Whitbread will use the money from the sale to invest in its Premier Inn brand at home and abroad, reduce its debt and boost its pension fund.
Subject to shareholder approval, the deal is expected to complete by the middle of next year.
Whitbread’s 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.
“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.”
The sale of Costa to Coca-Cola is another landmark in the 276-year history of Whitbread. Whitbread acquired Costa in 1995, for £19 million when it had only 39 shops and grew the business to be the UK’s favourite and largest coffee shop company.
In more recent years, Whitbread has focused on building Costa into a leading multi-channel, international coffee brand, Ms Brittain said.
“This has resulted in this unique strategic opportunity to combine the Costa brand with Coca-Cola’s global scale, product and distribution capabilities. This combination will ensure new product development, continued growth in the UK and more rapid expansion overseas.”
Coca-Cola’s president and chief executive 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.”
The sale means Whitbread will develop the growth opportunities for Premier Inn in the UK and in Germany.
“This will deliver strong return on capital and significant value to shareholders over the long term.”