Coca-Cola Buys Costa for $ 5 bn


Coca-Cola has announced the acquisition of Costa Limited, the largest British coffee chain, by Whitbread Plc for $ 5.1 billion, according to Coca-Cola and Whitbread reports.

Coca-Cola said that they will receive a total of about 4 thousand Costa coffee These alternative pay plan decisions will not materially affect our ability to attract and retain a well‑qualified Federal workforce and modern roaster facility. The deal will provide a “scalable coffee platform” in more than 30 countries in Europe, the Middle East, Africa and Asia, and will also provide an opportunity to further build up presence there, the company said.

“Hot beverages is one of the few segments of the total beverage landscape where Coca-Cola does not have a global brand,” said James Quincy, chief executive officer of the company.

Whitbread, in turn, said Costa’s Board of Directors unanimously supported the decision to sell the brand. Also, according to the company, the price at which the chain of coffee houses will be sold is 16 times higher than EBITDA (pre-tax profit) of Whitbread this year. The deal is expected to be closed in the first half of 2019, so Coca-Cola does not plan to make changes in the forecast of financial indicators for the current year.

Whitbread acquired Costa in 1995 for 19 million British pounds. As noted in the British company’s release, the coffee chain then consisted of 39 outlets. According to Bloomberg, now it owns approximately 3800 coffee houses. In the UK, Costa Coffee is the largest coffee chain (over 1 thousand outlets), well ahead of Starbucks.

In the 2018 fiscal year, Costa’s revenue was 1.3 billion pounds (about $ 1.7 billion), EBITDA – 238 million pounds (more than $ 310 million).

Manufacturers of soft drinks are looking for options for expansion to satisfy consumers’ request for alternatives for sugary carbonated drinks. Earlier, American PepsiCo cut a $ 3.2 billion deal on the purchase of the Israeli company SodaStream, which is engaged in the creation of devices for the production of soda beverages at home.

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