Coca-Cola takes big step into coffee with $5.1 billion Costa deal

Coca-Cola CEO'We try to be more than a soda company

Coca-Cola made its first formal approach to Whitbread in late June and the negotiations progressed quickly, with a deal signed at 6:52 on Friday morning, 8 minutes before it was announced to the stock market, Ms. Brittain said.

Coca-Cola on Friday said it had agreed to buy worldwide coffee chain Costa from its United Kingdom owner Whitbread, in a deal that gives the beverages behemoth its first global coffee brand.

Nestle, the market leader in packaged coffee, for example, has sealed a $7 billion licensing deal for Starbucks' retail business, while Europe's billionaire Reimann clan has built the JAB empire spanning coffee brands such as Kenco, Douwe Egberts and soft-drink maker Dr Pepper Snapple. Coca-Cola President and CEO James Quincey said the company wants to spend more in the hot beverages segment, adding that Coca-Cola can be a global brand in this category. It has invested heavily in Costa's expansion overseas recently, but had been looking to siphon off the business to generate funds for the expansion and for its other business, the budget hotel chain Premier Inn. Access to Coca-Cola's vast global distribution, sourcing and logistics network should generate significant synergies to boost Costa's profitability.

Whitbread said Friday that it would focus on its hospitality businesses under the Premier Inn franchise in the United Kingdom and Germany.

Nicholas Hyett, an equity analyst at London-based stockbrokers Hargreaves Lansdown, said Costa will get "lots of care and attention" from Coca-Cola.

The Costa deal opens a new business line for a company synonymous with fizzy, sugary beverages like Coca-Cola, Sprite, or Fanta, underscoring the pressure to find new areas of growth as consumer tastes change.

Whitbread bought Costa for 19 million pounds in 1995, when it had just 39 shops. "Coca-Cola's acquisition of Costa Coffee will heat up competition in the ready-to-drink coffee market, but JAB already has a strong footprint in retail coffee and remains a clear market leader by some margin".

Motorcade with John McCain's casket arrives at Arizona's capitol
If she's victorious, Democrats could pick up an Arizona Senate seat for the first time since Dennis DiConcini left office in 1995. Judith Hatch, a veteran from Phoenix , started the day by handing out flags to those who were assembled.

Elliott Management, another US -activist firm, then emerged as Whitbread's biggest shareholder in April with a stake of more than 6 per cent, and also began calling for a breakup of the group.

Some will be used to pay down debt and to make a contribution to the pension fund.

"On the one hand, £3.9bn is an undeniably rich valuation and likely far better than Costa could achieve as an independently listed company, valuing its earnings higher than those of the mighty Starbucks", he said. "Being part of the Coca-Cola system will enable us to grow the business farther and faster".

Costa Coffee has sought global expansion in recent years, particularly in China, as it looked to offset declining sales on British high streets.

"[Coke] plans to expand Costa's retail format east towards Asia, where coffee consumption habits are less established", Cowen analysts wrote in a "quick take" report.

Rothschild advised Coke on the deal.

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