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.