The Coca Cola Company (KO) announced Friday that it will purchase the Starbucks SBUX Coffee brand, the world's second-largest Starbucks SBUX for approximately $ 5 billion from British pub and hotel operator Whitbread plc ( 19659002) deal, where Coca Cola will earn approximately 16.4 times as much as Costa's full-year operation, which derives an enterprise value of £ 3.9 billion ($ 5 billion), was approved by the Whitbread Board, but is subject to the Approval of the shareholders of the company. who should receive a "significant" part of the money from the business. One of these shareholders, the activist investor Elliot Management, pushed for a spin-off of the cost business of Whitbread's central hotel operations.
"Costa is giving Coca-Cola new capabilities and expertise in coffee and our system can create growth opportunities for the Costa brand worldwide," said President James Quincey. "Hot drinks are one of the few remaining segments of the beverage landscape in which Coca-Cola has no Costa is giving us access to this market through a strong coffee platform, and I would like to welcome the team to Coca-Cola and look forward to working with them. "
Whitbread shares rose in the first Minutes of trading in London by more than 1
Whitbread CEO Alison Brittain said the $ 5 billion selling price was "significantly higher" than anything she could have pulled from a split, and earlier reports had suggested that private equity groups like Bain Capital, CVC Capital Partners Ltd. and TPG Capital LP viewed Costa's business with a £ 3 billion price tag
Credit Suisse AG analysts said early in the summer that the long timeframe that Whitbread was preparing for the spin-off increased the chances of a direct offer to Costa and Costa rated 10 times 2019 Ebitda or 2.5 billion pounds
"I am delighted that we have agreed to sell Costa to Coca-Cola for £ 3.9 billion," she said in a statement on Friday , "This transaction is great news for shareholders as it recognizes the strategic value of the Costa brand and its international growth potential and accelerates the realization of shareholder value."
"Whitbread acquired Costa in 1995 for £ 19 million, as it had only 39 stores and successfully grew to become Britain's favorite and largest coffee shop enterprise," she added. "In recent years, we have focused on making Costa a leading international multi-channel coffee brand, which has created this unique strategic opportunity to combine the Costa brand with Coca-Cola's global scaling, product and distribution capabilities."
Whitbread's latest business update, released in June, found that same-store sales to Costa declined 2%, while UK sales growth for the world's second-largest coffee chain grew 5.2%, driven by new deals and express machines. 19659002] Group property, Premier Inn, declined 0.9% like-for-like, but expansion in the UK and Germany contributed to overall sales growth of 2.2%.