Coke to buy U.K. coffee chain Costa for $5.1 bln

Coca-Cola Co. on Friday said it would buy British coffee-shop chain Costa for $5.1 billion, the latest bet by a major consumer goods company on coffee.

Coke, which is buying the chain from London-listed Whitbread PLC, said the purchase would give it a strong position in coffee across parts of Europe, Asia and the Middle East.

Costa, a rival to Starbucks in the U.K., was founded in London in 1971. It has nearly 4,000 retail outlets and also sells coffee in grocery shops and gas stations. Costa also has a growing presence in China.

For Coke, the deal expands its position in coffee that includes its Georgia brand in Japan.

"Hot beverages is one of the few segments of the total beverage landscape where Coca-Cola does not have a global brand. Costa gives us access to this market with a strong coffee platform," said Coke Chief Executive James Quincey.

Whitbread PLC (WTB.LN) said Friday that it will sell its Costa coffee business to Coca-Cola Co. KO, -0.85% for 3.9 billion pounds ($5.09 billion), and return most of the money received to its shareholders.

Whitbread, which also owns the Premier Inn hotel brand, said it will use the money not returned to shareholders to cut debt and make a contributions to its pension fund, enabling it to further expand Premier Inn in the U.K. and Germany.

The deal is expected to complete in the first half of 2019, Whitbread said.
Source: https://www.marketwatch.com

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