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The Coca-Cola Company announced that it has reached a definitive agreement to acquire Costa Limited, which was founded in London in 1971 and has grown to become a major coffee brand across the world. Photo courtesy of Costa Ltd

Atlanta, USA - August 31, 2018

• Acquisition to Give Coca-Cola a Strong, Global Coffee Platform with a Footprint in More than 30 Countries and Potential for Future Growth

• Fast-Growing Coffee Category Offers Opportunities for Expansion of Costa Brand in Multiple Channels and Formats

The Coca-Cola Company today announced that it has reached a definitive agreement to acquire Costa Limited, which was founded in London in 1971 and has grown to become a major coffee brand across the world.

Photo courtesy of Coca-Cola Company

The acquisition of Costa from parent company Whitbread PLC is valued at USD 5.1 billion and will give Coca-Cola a strong coffee platform across parts of Europe, Asia Pacific, the Middle East and Africa, with the opportunity for additional expansion.

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.

Photo courtesy of Coca-Cola Company

For Coca-Cola, the expected acquisition adds a scalable coffee platform with critical know-how and expertise in a fast-growing, on-trend category.

Costa ranks as the leading coffee company in the United Kingdom and has a growing footprint in China, among other markets.

Photo courtesy of Costa Ltd

Costa has a solid presence with Costa Express, which offers barista-quality coffee in a variety of on-the-go locations, including gas stations, movie theaters and travel hubs.

Costa, in various formats, has the potential for further expansion with customers across the Coca-Cola system.

Photo courtesy of Costa Ltd

The acquisition will expand the existing Coca-Cola coffee lineup by adding another leading brand and platform.

The portfolio already includes the market-leading Georgia brand in Japan, plus coffee products in many other countries.

Photo courtesy of Costa Ltd

Costa also 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.

James Quincey is President and CEO of The Coca-Cola Company.
Photo courtesy of Coca-Cola Company

“Costa gives Coca-Cola new capabilities and expertise in coffee, and our system can create opportunities to grow the Costa brand worldwide,” said Coca-Cola President and CEO James Quincey.
“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.”

Read Quincey's commentary on the announcement.

https://www.coca-colacompany.com/stories/james-quincey-on-costa

Coca-Cola President and CEO Talks About Planned Acquisition of Global Coffee Brand.
Photo courtesy of Coca-Cola Company

Coffee is a significant and growing segment of the global beverage business. Worldwide, coffee remains a largely fragmented market, and no single company operates across all formats on a global basis.

Photo courtesy of Costa Ltd

“The Costa team and I are extremely excited to be joining The Coca-Cola Company,” said Costa Managing Director Dominic Paul.
“Costa is a fantastic business with committed and passionate associates, a great track record and enormous global potential. Being part of the Coca-Cola system will enable us to grow the business farther and faster. I would like to say a huge thank you to our customers and to everyone in the Costa team who have helped us build the business to this position, and I look forward to the next exciting chapter in Costa’s vision of Inspiring the World to Love Great Coffee.”


Photo courtesy of Costa Ltd

Transaction details

The purchase price is £3.9 billion.
This translates to approximately $5.1 billion.

Upon the closing, The Coca-Cola Company will acquire all issued and outstanding shares of Costa Limited, a wholly owned subsidiary of Whitbread.
This subsidiary contains all of the existing operating businesses of Costa.

Whitbread will be seeking shareholder approval for the transaction, which is expected to take place by mid-October.

The deal is subject to customary closing conditions, including antitrust approvals in the European Union and China.
It is expected to close in the first half of 2019.

Photo courtesy of Costa Ltd

Coca-Cola expects the transaction to be slightly accretive in the first full year, not taking into account any impact from purchase accounting.

For the fiscal year 2018 (ending March 1, 2018), Costa generated revenue and EBITDA of £1.3 billion and £238 million GBP, respectively.

This equates to roughly $1.7 billion in revenue and $312 million in EBITDA.

Because Coca-Cola expects the transaction to close in the first half of 2019, there is no change to 2018 guidance.

The company’s long-term targets also remain unchanged.

Coca-Cola will provide additional information as part of comprehensive guidance provided during the fourth quarter 2018 earnings call.


Photo courtesy of Costa Ltd

Advisers

Rothschild acted as exclusive financial adviser to The Coca-Cola Company.

Clifford Chance acted as legal counsel to The Coca-Cola Company, and Skadden, Arps, Slate, Meagher & Flom acted as tax counsel to The Coca-Cola Company.


Coca-Cola President and CEO Talks About Planned Acquisition of Global Coffee Brand. Photo courtesy of Coca-Cola Company

Video
James Quincey on Costa

https://www.youtube.com/watch?v=yTk1XzLYM9w


Photo courtesy of Coca-Cola Company

About The Coca-Cola Company

The Coca-Cola Company (NYSE: KO) is a total beverage company, offering over 500 brands in more than 200 countries and territories.

In addition to the company’s Coca-Cola brands, our portfolio includes some of the world’s most valuable beverage brands, such as AdeS soy-based beverages, Ayataka green tea, Dasani waters, Del Valle juices and nectars, Fanta, Georgia coffee, Gold Peak teas and coffees, Honest Tea, innocent smoothies and juices, Minute Maid juices, Powerade sports drinks, Simply juices, smartwater, Sprite, vitaminwater and ZICO coconut water.

We’re constantly transforming our portfolio, from reducing sugar in our drinks to bringing innovative new products to market.

We’re also working to reduce our environmental impact by replenishing water and promoting recycling.

With our bottling partners, we employ more than 700,000 people, helping bring economic opportunity to local communities worldwide.

Learn more at Coca-Cola Journey at www.coca-colacompany.com

and follow us on

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https://www.linkedin.com/company/the-coca-cola-company

Source: The Coca-Cola Company

https://www.coca-colacompany.com/press-center/

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