Owner of Costa Coffee, Whitbread plc, has announced it has ‘entered into an agreement’ for the sale of the coffee chain in a deal worth around £3.9bn to Coca-Cola.
Whitbread had intended to spin off the chain as a separate firm, but said a straight sale was more profitable.
The multinational hotel, coffee shop and restaurant company headquartered in Dunstable, has said it will now focus on its Premier Inn business in the UK and Germany.
The firm purchased Costa for £19m in 1995 and since then, has been part of the process that turned it in to the UK’s largest coffee chain.
Costa has over 2,300 units across the UK, exceeding Starbucks with 956 and Caffe Nero with 675.
Following the news, Whitbread shares rose by around 17%.
Alison Brittain, Whitbread chief executive, said: “I am delighted that we have agreed the sale of Costa to Coca-Cola for £3.9 billion. 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.”
She added: “The announcement today 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.”
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.