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Coca-Cola Agrees to Buy Costa Coffee for $5.1 Billion Soft drink makers are looking to diversify as consumers look for alternatives to sugar-rich drinks and food

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Coca-Cola is buying Costa Coffee for $5.1 billion, announcing its arrival in the hot drinks business and making another deal in its push to move away from its traditional soda business.

Costa’s parent Whitbread agreed to sell the company at £3.9 billion or $5.1 billion, a price that’s 16.4 times this year’s EBITDA, a statement 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,” Whitbread Chief Executive Alison Brittain said in a statement.

Whitbread said that the net cash proceeds are expected to be approximately £3.8 billion at completion, after adjusting for estimated transaction costs and separation costs, and a significant majority of net cash proceeds will be returned to Whitbread’s shareholders.

Soft drink makers are looking to diversify as consumers look for alternatives to sugar-rich drinks and food, including sodas.

“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,” Coca-Cola Chief Executive Officer James Quincey said in the statement.

Whitbread had acquired Costa in 1995 for £19 million when it had only 39 shops and is now UK’s largest coffee shop company.

The deal is conditional upon agreement by Whitbread’s shareholders and other regulatory approvals and is expected to be completed in the first half of 2019, the statement said.

#CostaCoffee: WHAT THEY SAID

‘Positivity for the Retail Sector’

The Wow!

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-ENDS-

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