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Coca-Cola Buys U.K. High Street Coffee Chain for £3.9 Billion

Parent Company Whitbread will sell Costa Coffee, which has over 2,400 coffee shops in the U.K.

Coca Cola To Buy Costa Coffee For £3.9 billion
Coca-Cola will buy Costa Coffee for £3.9 billion
Dan Kitwood/Getty Images

The U.K. high street is a-changin’. Costa Coffee, Europe’s biggest coffee chain, with more than 2,400 shops in the U.K., has announced that it will be sold to the American soft drink giant, Coca-Cola. Whitbread, which owns Costa, says it will be sold for £3.9 billion.

Whitbread’s chief executive Alison Brittain said on the BBC’s Today programme that the company would use the money from the sale to expand the Premier Inn (budget hotel) business in the U.K. and Germany, adding that the company would also return cash to shareholders, pay down debt, and inject cash into the pension fund.

Whitbread, which was founded in 1742, began life as a brewery, but in the 1990s diversified, acquiring David Lloyd Leisure gyms; Marriott and Premier Lodge hotels, and restaurants TGI Fridays and Pizza Hut. It bought Costa, then with 39 sites, for £19 million in 1995.

As well as the U.K. operation, Costa has 1,400 outlets in 31 overseas markets and its spin-off brand Costa Express, found in service stations and hotel lobbies, has 8,237 vending machines globally.

Costa — together with other high street brands such as Caffe Nero, Starbucks, Pret, and McDonald’s McCafe — belongs to what is sometimes called the second-wave — the coffee phase that sits between the Italian espresso bars and independent cafes that arrived (largely in London) in the 1950s and the so-called, third-wave speciality coffee movement, which, inspired principally by the arrival of Antipodean migrants and the success of British baristas and coffee roasters in international competitions, has taken off in the past decade.

McDonalds has seen its coffee business grow in recent years, with coffee drinkers the fast food chain’s most frequent customers, while Pret was acquired for £1.5 billion by a German conglomerate in May. There’s life left in the U.K. high street yet and the third-wave, though now itself a multi-billion pound sector, has not eclipsed the second.