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Aug, 31 2018

Coca-Cola to buy UK’s Costa Coffee chain for $5.1 billion

The acquisition will give Coca-Cola almost 4,000 coffee outlets in the UK and across Europe.

Coca-Cola is buying Costa Coffee, world’s second largest coffee shop chain, from Britain's Whitbread Plc for an enterprise value of $5.1 billion. The acquisition will give Coca-Cola almost 4,000 coffee outlets in the UK and across Europe.

The deal has been agreed unanimously by the Whitbread board as in the best interests of shareholders. Whitbread had been in the process of demerging its coffee business from its hotel chain.

Costa was acquired by Whitbread in 1995. At that time, it had only 39 shops.

The acquisition will help Coca-Cola to move away from fizzy drinks towards healthier options for increasingly health-conscious consumers.

James Quincey, CEO of Coca-Cola, said, "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."

For Whitbread, the deal will reduce debt and contribute to the pension fund. It will further expand its hotel chain Premier Inn in the UK and Germany.

Alison Brittain, Chief Executive of Whitbread, said, "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."

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