Coca-Cola Buys Coffee Chain Costa in $5.1 Billion Deal

Coca-Cola (NYSE:KO) is expanding further into the world of coffee with the acquisition of Costa.

Coca-Cola Buys Coffee Chain Costa in $5.1 Billion Deal

Source: Coca-Cola

Coca-Cola says that it is spending a total of $5.1 billion to acquire the Costa coffee chain. The deal will have the company acquiring all outstanding shares of the coffee company from parent company Whitbread PLC.

Whitbread shareholders will first have to vote in favor of the deal before Coca-Cola can take Costa off its hands. A vote from shareholders is expected to take place in mid-October, but the deal won’t close then.

Coca-Cola says that it is expecting the deal to close during the first half of 2019. As such, it isn’t making any updates to its guidance for 2018. However, it does says that it expects the acquisition to be slightly accretive to its earnings for fiscal year 2019.

According to Coca-Cola, this deal will allow it to expand its coffee business much further than it currently reaches. That’s due to the global reach of the Costa brand. The coffee chain operates close to 4,000 retail outlets. Its business reaches parts of Europe, Asia Pacific, the Middle East and Africa.

“Hot beverages is one of the few segments of the total beverage landscape where Coca-Cola does not have a global brand,” James Quincey, President and CEO of Coca-Cola, said in a statement. “Costa gives us access to this market with a strong coffee platform.”

KO stock was down slightly as of Friday morning and is down roughly 1% year-to-date.

As of this writing, William White did not hold a position in any of the aforementioned securities.

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