Coca-Cola buys British coffee chain Costa for $5.1 billion

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Coca-Cola has agreed to buy the world's largest coffee chain Costa Coffee, which has more than 3500 coffee shops around the world. It expects the transaction to be completed in the first half of 2019.

The board of British multinational Whitbread have unanimously agreed to a £3.9bn takeover of its Costa Coffee subsidiary by Coca-Cola, as it prioritises growth at its Premier Inn brand in the United Kingdom and Germany.

The two companies said on Friday that Coke, one of the biggest soft drinks groups in the world, would buy Costa's nearly 4,000 outlets across markets such as Britain, Europe and China after Whitbread's board unanimously backed the deal.

Costa Coffee has more than 2,400 outlets.

The announcement comes three days after Nespresso maker Nestle said it sealed a deal to market the products of United States coffee giant Starbucks around the world, outside of its cafes.

"Costa gives Coca-Cola new capabilities and expertise in coffee, and our system can create opportunities to grow the Costa brand worldwide", said James Quincey, Coca-Cola President and CEO. In addition to its shops, Costa has self-serve coffee machines in grocery stores and gas stations.

As well as being the largest United Kingdom coffee chain, Costa is also the world's second largest. Earlier this month, PepsiCo agreed to pay $3.2bn for SodaStream, which makes carbonated-water dispensers.

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Costa doesn't now have a presence in North or South America, but Quincey indicated that one potential early expansion route would be to use Costa's vending operation and grow the company's ready-to-drink products.

The leisure group, which owns the Premier Inn hotel business, had been under pressure from shareholders to demerge and list the coffee chain as a separate company.

Costa Coffee will return most of the proceeds from the Coca-Cola to shareholders.

For Costa, Hyett said Costa will get "lots of care and attention" from Coca- Cola.

Hot beverages, he said, is one of "the few remaining segments of the total beverage landscape where Coca-Cola does not have a global brand".

Whitbread shares jumped 19 percent in early trading, with dealers saying the purchase price was more than 700 million pounds ($911 million) higher than expected.

Doing so, Whitbread said, would "provide headroom" to further expand the Premier Inn budget hotel chain in Britain and Germany.