Coca-Cola expands from cold drinks to hot beverages, acquires London’s Costa Coffee for $5 billion.

With an aim to gain a strong foothold in the hot beverages segment globally, leading beverages maker Coca-Cola has purchased London’s coffee shop chain Costa Coffee in a mega $5.1 billion deal. The acquisition of Costa from parent company Whitbread PLC will give Coca-Cola a strong coffee platform across parts of Europe, Asia Pacific, the Middle East and Africa, with nearly 4,000 retail outlets and the scope for additional expansion, the company said in a statement. “Hot beverages is one of the few segments of the total beverage landscape where Coca-Cola does not have a global brand. Costa gives us access to this market with a strong coffee platform,” said Coca-Cola President and CEO James Quincey.

Coca-Cola acquires Costa Coffee: Key things you should know about the deal

  1. Coca-Cola will purchase the coffee business for £3.9 billion, which translates to approximately $5.1 billion. Coca-Cola expects the transaction to close in the first half of 2019. Upon the closing, The Coca-Cola Company will acquire all issued and outstanding shares of Costa Limited.
  2. Costa Limited was founded in London in 1971 and has grown to become a major coffee brand across the world. Costa operations include a leading brand, nearly 4,000 retail outlets with highly trained baristas, a coffee vending operation, for-home coffee formats and Costa’s state-of-the-art roastery.
  3. Costa Limited is a wholly owned subsidiary of Whitbread PLC. The group had acquired Costa in 1995, for £19 million (approx. $25 million) when it had only 39 shops. Whitbread will be seeking shareholder approval for the transaction, which is expected to take place by mid-October, Coca-Cola said in a statement. The deal is subject to customary closing conditions, including antitrust approvals in the European Union and China, it added.
  4. Coca-Cola’s portfolio already includes the market-leading Georgia brand in Japan, plus coffee products in many other countries. Costa Coffee’s acquisition will expand the company’s existing coffee lineup by adding another leading brand and platform.
  5. Costa will provides Coca-Cola with strong expertise across the coffee supply chain, including sourcing, vending and distribution. This will be a complement to existing capabilities within the Coca-Cola system.