Whitbread PLC has announced that it has entered into an agreement to sell Costa Limited to The Coca-Cola Company for an enterprise value of £3.9bn. The transaction was unanimously agreed by the Whitbread board to be in the best interests of shareholders who, it says, will receive “a significant majority of net cash proceeds”.
Whitbread chief executive Alison Brittain said: “I am delighted that we have agreed the sale of Costa to Coca-Cola for £3.9bn. 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.
“The announcement represents a substantial premium to the value that would have been created through the demerger of the business and we expect to return a significant majority of net proceeds to shareholders. Whitbread will also reduce debt and make a contribution to its pension fund, which will provide additional headroom for the expansion of Premier Inn.”
James Quincey, Coca-Cola president and CEO, added: “Costa gives Coca-Cola new capabilities and expertise in coffee and our system can create opportunities to grow the Costa brand worldwide. 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. I’d like to welcome the team to Coca-Cola and look forward to working with them.”
The transaction is conditional upon agreement by Whitbread’s shareholders and various other approvals, including anti-trust approvals, and is expected to complete in the first half of 2019.