Coca-Cola has agreed to buy the world’s second largest Coffee chain Costa from British Whitbread Plc for £3.9 billion ($5.1 billion).
The company has moved a one step ahead after Nestlé inked an agreement with Starbucks coffee yesterday, to market its products around the world in order to expand its portfolio in the US and Europe where it is struggling.
Whitbread Plc in a statement on Friday said the deal with the largest soft drinks manufacturer will provide Coca-Cola with roughly 4,000 outlets in the United Kingdom and across Europe. The decision was made by the board of directors in the best interest of shareholders.
Whitbread’s main business is hospitality; the company owns several hotel chains in the UK and Europe including Premier Inn, Holiday Inn, and Restaurants. The company acquired Costa for £19 million when it had only 39 outlets.
Coca-Cola is now focusing more on healthier options and moving gradually away from fizzy drinks because of increasing health-conscious consumers.
According to Coca-Cola CEO, James Quincey, “hot beverages is just one of the segments in total beverages business where Coca-Cola currently do not have any considerable global brand. Costa can provide us with access to the huge market with a strong coffee platform.”
Whitbread said they will use the fund from the deal in a better way by reducing debts, contributing pension fund and further expand their Premier Inn business in the UK and Germany.
Whitbread CEO, Alison Brittain said, “The deal represents the premium to the value that will be created through the demerger of the business, and we expect to return the significant majority of the net proceeds to shareholders.”