Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  Equities  >  Nyse  >  The Coca-Cola Company    KO

THE COCA-COLA COMPANY

(KO)
  Report  
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsPress ReleasesOfficial PublicationsSector newsMarketScreener StrategiesAnalyst Recommendations

Coca-Cola quickly brews up Costa 'Del Sol' deal with Whitbread

share with twitter share with LinkedIn share with facebook
share via e-mail
0
08/31/2018 | 01:15pm EST
FILE PHOTO: A woman walks past a Costa Coffee in Loughborough

LONDON (Reuters) - The 3.9 billion-pound ($5.1 billion) sale of the Costa coffee chain to Coca-Cola began brewing when Whitbread's boss Alison Brittain crossed paths with the chief executive of the soft drinks giant at a conference in May.

Brittain, who has led Costa-owner Whitbread since December 2015, didn't know James Quincey before the Microsoft CEO Summit in Seattle.

"I hadn't met him before that," Brittain said on Friday. "It has been a very fast deal."

The deal was codenamed "Project Del Sol" - a pun on Spain's Costa del Sol holiday coast - by Coca-Cola and "Project Crimson" - an allusion to Costa's red branding - by the Whitbread team, according to a person familiar with the matter.

It completes a years-long streamlining of FTSE 100 leisure group Whitbread that will leave it focused on its Premier Inn hotel chain.

It comes at a time when investor pressure had been mounting on one of Britain's oldest companies and the business had already been actively working on a demerger.

In December 2017, U.S. activist investor Sachem Head disclosed it had built a stake in Whitbread and the following month Reuters reported that the fund was pushing Brittain to consider splitting Costa from Premier Inn.

Elliott, another U.S. activist firm, then emerged as Whitbread's biggest shareholder in April with a stake of more than 6 percent and also began calling for a break-up of the group. The hedge fund was engaging with the leisure group in a "combative way," said a source familiar with the situation.

DEMERGER PLAN

Less than a fortnight after Elliott announced its stake and before Brittain met Quincey in Seattle, Whitbread announced it would spin off Costa into a separately listed company in a demerger that was planned to take up to 24 months.

That triggered interest in the coffee chain from potential buyers, Brittain said.

"Costa is a lovely company and therefore there were clearly suitors for that company and we didn't think any of them were wearing the right suit and driving the right car," she said, declining to identify the firms.

"We had always determined at the start, when we announced the demerger, that we would not be interested in a sale to financial companies but we would remain open to a strategic buyer such as Coca-Cola who could bring additional value for our shareholders, because of the synergies that they have."

Coca-Cola will be able to use its distribution network to considerably extend the reach of Costa brand.

While Costa has about 7,000 self-service machines in Britain and about 1,000 overseas, as well as its coffee shops, the U.S. giant has millions of vending machines around the world that it could use to sell Costa products.

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, eight minutes before it was announced to the stock market, Brittain said.

She kept pushing for a higher price even after entering exclusive talks with the soft drinks giant and wouldn't surrender to a low-ball bid, a source close to the company said.

The U.S. group's interest in Costa pre-dated the demerger announcement and the fact that Quincey, who took charge of Coca-Cola in May last year, is British would have helped to put the coffee chain on the soft drinks company's radar, the Whitbread boss added.

"They have been scanning for a coffee acquisition and they have been doing work on Costa for quite some time," she said.

SHARES JUMP

Whitbread shares closed up 14.3 percent on Friday in London as analysts praised the price tag that Costa had fetched, which values the chain at 16.4 times its latest annual earnings.

Elliott said that it "congratulates the board of Whitbread on this proposed transaction and looks forward to continuing to engage with them to maximize the value of the remaining businesses."

Scott Ferguson, managing partner and portfolio manager at Sachem Head, said that his fund was "very pleased with the transaction and credit management and the board for thoughtfully maximizing value for shareholders."

The deal brings to an end Whitbread's history as a conglomerate in the leisure sector.

While the bulk of the proceeds will be returned to shareholders, it will use some of the cash to pay down debt and address its 350 million-pound pension deficit, to give it the flexibility to continue expanding its Premier Inn hotels in the UK and Germany, which will become its main business.

Founded 276 years ago as a brewery by Samuel Whitbread and Godfrey and Thomas Shewell, Whitbread grew into a sprawling group that had interests spanning pubs, fitness clubs, casual dining chains and Costa, which it bought for 19 million pounds in 1995.

But it has slimmed down in recent years, exiting brewing in 2000 and David Lloyd Leisure clubs, the luxury Marriott hotel brand, TGI Fridays and Pizza Hut between 2006 and 2007.

As well as hotels, its remaining Premier Inn business also runs the Brewers Fayre and Beefeater pub and restaurant brands.

($1 = 0.7711 pounds)

(Additional reporting by Martinne Geller and Maiya Keidan; Editing by Adrian Croft)

By Ben Martin, Pamela Barbaglia and Kate Holton

Stocks mentioned in the article
ChangeLast1st jan.
FTSE 100 INDEX 0.28% 7234.11 End-of-day quote.0.00%
MICROSOFT CORPORATION 1.21% 151.75 Delayed Quote.49.40%
NESTLÉ S.A. 1.33% 103.9 Delayed Quote.30.20%
STARBUCKS CORPORATION 2.21% 86.32 Delayed Quote.34.04%
THE COCA-COLA COMPANY 0.42% 54.42 Delayed Quote.14.93%
UNILEVER PLC 1.70% 4551 Delayed Quote.10.77%
WHITBREAD PLC 2.04% 4599 Delayed Quote.0.44%
share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news on THE COCA-COLA COMPANY
12/05COCA COLA : OnlineSuccess.Site Boosts Brand Awareness through Premium Social Med..
AQ
12/03BEYOND THE BOTTLE : Coca-Cola Licensing Navigates New Categories, Products and P..
AQ
11/29THE COCA-COLA COMPANY : Ex-dividend day for
FA
11/21COCA COLA : CEO, James Quincey in Africa, Defines Region as Company's Future Gro..
AQ
11/20COCA COLA : Costa Coffee Names McDonald to Succeed Paul as CEO
DJ
11/20COSTA COFFEE : Announces Appointment of New CEO
BU
11/18COCA COLA AMATIL : Confident Of Growth In 2020
AQ
11/15COCA COLA : Sprite Switching from Green to Clear PET bottles in Southeast Asia
AQ
11/15COCA COLA : Sprite Switching from Green to Clear PET bottles in Southeast Asia
AQ
11/14COCA COLA : Much ado about VAT increase
AQ
More news
Financials (USD)
Sales 2019 37 059 M
EBIT 2019 10 289 M
Net income 2019 8 885 M
Debt 2019 32 915 M
Yield 2019 2,95%
P/E ratio 2019 27,1x
P/E ratio 2020 24,4x
EV / Sales2019 7,18x
EV / Sales2020 6,91x
Capitalization 233 B
Chart THE COCA-COLA COMPANY
Duration : Period :
The Coca-Cola Company Technical Analysis Chart | MarketScreener
Full-screen chart
Technical analysis trends THE COCA-COLA COMPANY
Short TermMid-TermLong Term
TrendsNeutralNeutralBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 24
Average target price 58,55  $
Last Close Price 54,42  $
Spread / Highest target 15,8%
Spread / Average Target 7,58%
Spread / Lowest Target -0,77%
EPS Revisions
Managers
NameTitle
James Quincey Chairman & Chief Executive Officer
Brian John S. Smith President & Chief Operating Officer
John Murphy Chief Financial Officer & Executive Vice President
Nancy W. Quan Chief Technology Officer & Senior Vice President
Barry N. Simpson Chief Information Officer & Senior Vice President
Sector and Competitors
1st jan.Capitalization (M$)
THE COCA-COLA COMPANY14.93%233 162
KEURIG DR PEPPER14.24%41 205
SUNTORY BEVERAGE & FOOD LIMITED-3.16%13 488
COCA-COLA HBC AG2.45%11 968
ARCA CONTINENTAL, S.A.B. DE C.V.-6.89%9 313
TINGYI (CAYMAN ISLANDS) HOLDING CORP.19.39%9 021