The Costa Coffee brand could be on its way to securing significantly larger presence within the wider UK retail scene thanks to £3.9bn purchase of the coffee chain by Coca-Cola.
Whitbread, the owner of the Costa coffee chain and brand as well as Premier Inn, said its board had unanimously approved the deal as being in the best interests of shareholders.
Whitbread chief executive Alison Brittain said the deal would combine the Costa brand with Coca-Cola’s global scale, product and distribution capabilities, and when questioned by BBC Radio 4 on whether this meant more Coca-Cola presence in Costa shops, she said “it would mean quite the opposite.”
“Coca-Cola wants the coffee brand and with that we will see a greater presence of Costa products across shops, vending machines, when you order a coffee at a pub or a bar, there will be Costa coffee,” she said.
Whitbread bought Costa, now the UK’s biggest coffee chain, for £19 million in 1995. At this time it had just 39 outlets. It now has more than 2,4000 UK coffee shops, as well as some 1,400 outlets in 31 overseas markets. Costa Express has 8,237 vending machines worldwide.
Brittain added: “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.
“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.”