Costa Coffee sold for £3.9bn

WHITBREAD has agreed to sell its Costa Coffee chain to Coca-Cola for £3.9bn.

The company said a sale of the business is now “in the best interests of shareholders”.

The group said earlier this year that it would split Costa and list it as a separate entity, following pressure from activist investor Elliott.

Proceeds of the deal will be used to pay down debt and boost the pension fund.

Whitbread added it intends to return a significant majority of net cash proceeds to shareholders.

Whitbread acquired Costa in 1995 for £19m from founders Sergio and Bruno Costa when it had only 39 shops. It now has more than 2,400 outlets and is embarking on overseas expansion.

The company said the sale of the coffee chain will allow it to focus on its Premier Inn hotels business.

Chief executive Alison Brittain 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.

“This combination will ensure new product development, continued growth in the UK and more rapid expansion overseas.”

Coca-Cola boss James Quincey said: “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.”

The deal comes hot the heels of another big money acquisition in the sector.

Pret A Manger was earlier this year sold by Bridgepoint for £1.5bn to a company controlled by JAB, the investment vehicle of Germany’s wealthy Reimann family.