Coca-Cola to buy Costa coffee chain for $5.1 billion

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Whitbread said in a statement on Friday that the deal, which will give Coke nearly 4,000 coffee outlets in the United Kingdom and across Europe, had been agreed unanimously by the Whitbread board as in the best interests of shareholders.

Coke's annual sales have been in decline since 2012. It is second most popular in the Chinese market with over 400 coffee shops around the most populous country in the world.

SodaStream makes machines that carbonate home tap water. It also operates almost 8,300 Costa vending machines worldwide.

Whitbread shares rose as much as 19 percent.

Whitbread agreed to sell Costa at a price that's 16 times this year's earnings before interest, taxes, depreciation and amortisation, the companies said in a statement Friday.

The deal, expected to close in the first half of 2019, comes on the heels of Coca-Cola's announcement earlier in August that it was buying a minority ownership stake in sports drink maker BodyArmor for an undisclosed amount. The spin-off would have taken up to two years, the company had said. The company will return most of the proceeds to its shareholders, it said.

Whitbread bought Costa for 19 million pounds in 1995, when it had just 39 shops. He said: "Costa is a platform with a great supply chain in coffee, a world-class roastery, a strong retail presence and a vending system".

Costa doesn't now have a presence in North or South America, but Quincey indicated that one potential early expansion route would be to use Costa's vending operation and grow the company's ready-to-drink products.

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Costa's like-for-like sales in the United Kingdom dropped 2 percent in the company's first quarter as the retail market weakened.

Costa outranks Starbucks in the United Kingdom and is expanding in markets such as China.

As well as being the largest United Kingdom coffee chain, Costa is also the world's second largest.

Nestle joined the trend of coffee giants taking aim at smaller niche producers, buying Blue Bottle Coffee and Chameleon Cold Brew.

Earlier this year, Nestle and Starbucks agreed a $7.2 billion global coffee alliance, which will see Nestle market, sell and distribute Starbucks products outside its stores worldwide.

JAB added the United Kingdom -based food-and-coffee chain Pret A Manger in a $2 billion deal earlier this year, following its past acquisitions of high-end coffee brands Peet's and Stumptown.

Another of JAB's coffee brands, Keurig, merged its business with one of Coca-Cola's domestic competitors - Dr Pepper Snapple - in January.

Coca-Cola's purchase adds to its Georgia coffee brand in Japan and the USA group's coffee products in other countries.

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