Coca-Cola buys up Costa coffee chain for £3.9bn and paves way for latte war 2,400
US SOFT drinks giant Coca-Cola swooped on Britain’s biggest coffee shop chain yesterday in a £3.9billion takeover. In an announcement which caught the City by surprise, the takeover of the world’s second largest coffee chain paves the way to challenge Starbucks in a global “latte war”. Costa, which has more than 2,400 UK shops and a further 1,400 in 30 countries, is likely to see more vending machine coffee sales and the creation of “ready to drink cold brew coffees”. The takeaway coffee market is said to be worth £6.3billion in the UK alone, but Costa has suffered from falling high street sales which have seen leading chains and restaurants close.
The takeover news sent shares in Costa’s owner, leisure group Whitbread, soaring by nearly 20 per cent.
The company wanted to split into two businesses – Costa and Whitbread’s Premier Inn hotel and restaurants – with Costa floated on the stock market by 2020.
Whitbread chief executive Alison Brittain said the price paid by Coca-Cola was far higher than if Costa had de-merged into a standalone company. Coca-Cola’s British chief executive James Quincey, 53, said the move was “not an acquisition where we’re looking for places to save costs in the business”, but “to grow the business and our participation in the category”. Costa began in London’s Vauxhall Bridge Road in 1978. Whitbread bought the firm for £19million in 1995 and Costa grew to become the UK’s largest chain, with 40 per cent of the coffee shop market. Coca-Cola already has more than 80 drinks across 20 different brands.