Coca-Cola is the latest major consumer-goods company to venture into the sizzling market for coffee, after agreeing to take over Dunstable, UK-based Costa Coffee from Whitbread PLC for $5.1 billion (£3.9 billion) in cash.
Costa Coffee, the biggest coffee chain in the United Kingdom and the second biggest in the world with nearly 4,000 retail outlets, also sells coffee in gas stations and grocery stores.
The deal, which is still subject to approval by shareholders of Whitbread as well as customary closing conditions (including antitrust approvals in the China and the European Union), is expected to close in the first half of next year.
Coke will then acquire all outstanding and issued shares of Costa Ltd. The company is seeking to diversify from its core business as soft-drink consumer numbers keep shrinking.
“Costa gives Coca-Cola new capabilities and expertise in coffee, and our system can create opportunities to grow the Costa brand worldwide. Hot beverages is one of the few remaining segments of the total beverage landscape where Coca-Cola does not have a global brand.” said Coca-Cola chief executive officer James Quincey. “Costa gives us access to this market through a strong coffee platform”
Coke a rival of PepsiCo, also agreed to acquire Israeli-based SodaStream International Ltd, the company behind the popular in-home soda making machines, for $3.2 billion earlier this month.
These acquisitions are seen as attempts by both beverage giants to move out of a business area that is almost on the blink of government regulation due to the increasing global obesity concerns. Industry analysts also believe that Coca-Cola’s could be a huge blow to Starbucks investors.
Starbucks shares were up 0.95% during the early hours of regular trading on Friday, as London-listed shares in Whitbread rallied 15.27%. Coca-Cola stock was little changed near $45 in the morning trading session. It has lost nearly 2% in the last twelve months, while the S&P 500 Index has added nearly 17%.
Coca-Cola Profile
The Coca-Cola Company, a beverage company, manufactures and distributes various non-alcoholic beverages worldwide. The company provides water, enhanced water, and sports drinks; juices; juice, dairy, and plant-based beverages; teas and coffees; and energy drinks.
It also offers concentrates, syrups, beverage bases, source waters, and powders/minerals, as well as fountain syrups to fountain retailers, such as restaurants and convenience stores. The company sells its products primarily under the Coca-Cola, Diet Coke, Coca-Cola Zero Sugar, Fanta, Sprite, Minute Maid, Del Valle, Schweppes, Aquarius, Minute Maid Pulpy, Dasani, Glacéau Smartwater, Ice Dew, and Ayataka brand names.
It offers its beverage products through a network of company-owned or controlled bottling and distribution operators, as well as through independent bottling partners, distributors, wholesalers, and retailers.
Coca-Cola competes with PepsiCo, Inc., Unilever, Dr Pepper Snapple Group, Inc., Nestle S.A., Groupe Danone, Suntory Beverage & Food Limited, Mondelez International, Inc., and The Kraft Heinz Company. The company was founded in 1886 by Asa Griggs Candlerand. Its headquarters are located in Atlanta, Georgia. –YahooFinance
Sources
https://www.marketwatch.com/story/coke-to-buy-uk-coffee-chain-costa-for-51-bln-2018-08-31
