Home » Money

Coca-Cola to Buy UK Coffee Chain Costa for $5.1 Billion

31 August, 2018, 20:39 | Author: Kristi Dunn
  • Costa Coffee

The Whitbread board unanimously backed the deal, which is expected to close in the first half of 2019.

The board of British multinational Whitbread have unanimously agreed to a £3.9bn takeover of its Costa Coffee subsidiary by Coca-Cola, as it prioritises growth at its Premier Inn brand in the United Kingdom and Germany.

Coca-Cola's planned purchase follows Nestlé's $7 billion licensing deal to sell Starbucks coffee in grocery stores around the world to revitalize its hot-drink business, which experts say has stagnated, especially with younger customers. It now has more than 2,400 United Kingdom coffee shops, as well as some 1,400 outlets in 31 overseas markets.

The research firm Mintel estimated that the global coffee shops market was worth £127.3bn ($165bn) in 2017, while another £43.2bn ($56bn) worth was sold in shops - whether as beans or the increasingly popular pods used by consumers playing barista at home.

"Costa gives Coca-Cola new capabilities and expertise in coffee, and our system can create opportunities to grow the Costa brand worldwide", Coca-Cola President James Quincey said. Coca-Cola's chief rival Pepsi announced earlier this month that it would buy Israeli DIY seltzer company SodaStream for $3.2 billion. Quincey indicated that one potential early expansion route would be to use Costa's vending operation and expand the company's ready-to-drink products.

Then Coca-Cola got in touch with what Whitbread said was a "highly compelling" offer.

Authorities Identify Mystery Woman in Texas Doorbell Video
Authorities say the man was found dead from a single gunshot wound after deputies responded to a welfare call. As reported by the Independent, the Montgomery woman luckily has also been found safe and sound.

"This is a bitter sweet moment for Whitbread investors", noted Nicholas Hyett, equity analyst at Hargreaves Lansdown.

A significant majority of net cash proceeds meant to be returned to shareholders, Whitbread added.

Shareholders in Whitbread were impressed by the deal and the company's share price soared 16 per cent in morning trading in London.

"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", he added.

Whitbread said it would return cash to shareholders, cut debt and contribute to its pension fund with proceeds from the deal and further expand its hotel chain Premier Inn in Britain and Germany.

Whitbread previously said in April it would split Costa off as a separate firm from Premier Inn.



Ariana Grande to perform at Aretha Franklin's funeral
I was able to visit with her a few times there at the apartment and to hold her hand and to YouTube my dad singing Joy Bells. On the inside of the lid embroidered into the fabric is " Aretha Franklin the Queen of Soul".

No Need to Resume US-South Korea Wargames
But since that historic meeting, there has been little progress toward the United States goal of North Korean denuclearisation. Even so, Mattis noted that diplomacy remained the core focus of USA policy, de-emphasizing a military role.

The family Meghan Markle and Prince Harry was the completion
Dog lover Meghan, 37, was devastated when she had to leave her beloved pooch Bogart behind when she moved to the UK. Meghan, who was an activist already before meeting Harry on a blind date, fits neatly into that life plan.

White House lowers flag for McCain again after backlash
The proclamation affects the flag atop the White House and all public buildings, as well as military installations and embassies. McCain was a frequent critic of President Donald Trump on everything from his leadership style to his Russian Federation policy.

John McCain’s former rivals pay tribute: ‘We are all in his debt’
It was McCain who stopped Trump's repeal of Obamacare and Trump referred to the veteran as "not a war hero". At the time of his death, Senator McCain had served the United States of America for six decades.

Michigan Gov. Rick Snyder lowers flags to honor Sen. John McCain
The Richmond man, and former naval aviator, spent five and a half years with McCain has a prisoner of war in North Vietnam. He later told evangelical leaders that "we very much appreciate everything that senator McCain has done for our country".

Manchester United vs. Tottenham Hotspur - Football Match Report
Jose Mourinho's Manchester United side lost 3-0 to Tottenham at home, which doesn't portend good things. After the match, Mourinho did his post-match interview and had some strong words to the media.

US, Mexico strike tentative NAFTA deal
US President Donald Trump , a frequent critic of the existing deal, announced the apparent breakthrough on Monday. Stocks are rising broadly as the US and Mexico prepare to announce the details of the new trade agreement.

Cyberpunk 2077 Gameplay Demo Revealed
CD Projekt Red has been teasing us with Cyberpunk 2077 details all year long and the studio is showing no signs of slowing down. Over the last few months, CD Projekt Red took the time to polish the demo to show the public and well, it looks insane.

Tiger Woods eyes Sam Snead’s PGA win record as FedExCup Playoffs loom
Essentially, for someone who looked like their time at the top of the sport was done, things are looking good for Tiger. Mickelson and Woods paired together in the final round of a major would need no hype to drive ratings through the roof.