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

TIL Desk/Business/London/ Coca-Cola is hoping to give itself another caffeine-fueled boost. The company said today it will buy the Costa coffee brand from British firm Whitbread for 3.9 billion pounds (USD 5.1 billion) in cash. Costa is Britain’s biggest coffee company, with over 2,400 coffee shops in the UK and another 1,400 in more than 30 international markets.

The deal, expected to complete in the first half of 2019, plugs a big hole in Coca-Cola’s portfolio, giving it a presence in one of the few beverage markets it doesn’t currently contend in. It could potentially provide stiff competition to the likes of Starbucks.

“Hot beverages is one of the few remaining segments of the total beverage landscape where Coca-Cola does not have a global brand,” said James Quincey, Coca-Cola President & CEO. In the year to March, Costa made an operating profit of 123 million pounds on sales of 1.29 billion. The deal represents a big return to Whitbread, which bought Costa in 1995 for 19 million pounds. Since then, Costa has grown from just 39 shops.