Want a Costa coffee (chain)? That’ll be £4bn, thank you

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Other: Business

Could we be about to see the birth of the Coke-a-cino? Well, maybe. Because Whitbread has just announced the sale of Costa Coffee to Coca-Cola.

Agreement on the deal was about as unanimous as it gets, with over 99% of shareholders voting in favour of the £3.9bn sale.

Whitbread has been under pressure from shareholders to take Costa out of the main business and make it a separate entity for a while. There isn’t, after all, any great synergy between Premier Inn (the bulk of Whitbread’s business) and the coffee company, and there was a feeling that both would perform better if consciously uncoupled.

So to have the American soft drinks giant come in with a seriously generous offer was a major bonus.

Coke is paying £21 a share – £6 a share over the current valuation. The total offer is 16-times pre-tax earnings and Whitbread chief executive Alison Brittain rightly described the deal as ‘exceptional’.

Whitbread bought the coffee company from the founders, Sergio and Bruno Costa, for £19m in 1995 and has cashed in on the coffee boom of the last decade to grow it from 39 shops to 2,400 outlets.

About Author

Chris Losh

After five years working on My Weekly magazine (during which time he learned how to write horoscopes and make things out of mince) in 1995 Chris Losh entered the world of drinks writing and, despite all advice from his doctor – and the wishes of most South African winemakers – has stayed there ever since. He began on Wine and Spirit International, editing it for several years before moving on to edit Wine Magazine. Both publications have since gone the way of the Dodo, but he claims to have nothing to do with their demise, and his alibi appears solid, since he was freelance writing for anyone who would pay him at the time. In 2007, he helped to set up both Imbibe magazine and the Sommelier Wine Awards, and has spent much of the last three years eating, drinking, and listening to French sommeliers talk about minerality. In 2009 he was shortlisted for the Louis Roederer Feature Writer of the Year, but didn’t win. Perhaps he should have stuck to horoscopes. And mince.

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