Whitbread, which acquired the brand in 1995 for £19m when it had only 39 outlets, had intended to spin off the chain as a separate business but the transaction was “unanimously agreed” by the Whitbread board to be in the “best interests of shareholders”.
Whitbread said the sale will allow it to focus on the “attractive structural growth opportunities for its leading hotel business, Premier Inn, in the UK and Germany”. Whitbread also said a “significant majority” of the net cash proceeds of the deal would be returned to shareholders.
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.
“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.”
James Quincey, Coca-Cola president & CEO, added: “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. I’d like to welcome the team to Coca-Cola and look forward to working with them.”