Coca-Cola to buy Costa coffee chain for £3.9bn

Coca-Cola is to buy Costa coffee from its UK owner Whitbread for £3.9billion ( $5.1bn. Whitbread shares leapt forward 18 per cent after it unveiled a deal to sell its Costa Coffee chain to Coca-Cola including debt.

The sale marks the end of Whitbread’s 23-year ownership of Costa, which the Group bought for £19million  when it had only 39 shops. It now boasts more than 2, 400 shops in UK and 1, 400 in more than 30 international markets, as well as operating a self-service business.

Alison Brittain CEO said the deal represented a “substantial premium” to what would have been achieved by demerging Costa. A significant majority of the net cash proceeds of around £3,.8bn from the deal will be returned to shareholders. The company will also use the money to pay down debt, contribute to its pension fund and finance the expansion of Premier Inn.

James Quincey, Coca-Cola President and CEO said that  Costa could give the company, “ new capabilities and expertise in coffee and our system can create opportunities to grow the Costa brand worldwide”.