- Coca-Cola is buying UK-based coffee-giant Costa Coffee for $US5.1 billion (£3.9 billion).
- British investment bank Rothschild & Co is advising Coca-Cola on the deal.
- Whitbread, the parent of Costa Coffee, has instructed Goldman Sachs, Morgan Stanley, and Deutsche Bank to advise on the transaction.
Coca-Cola on Friday announced a shock deal to buy the coffee chain Costa Coffee from its parent company Whitbread in a deal valued at just shy of $US5.1 billion (£3.9 billion).
The acquisition marks Coca-Cola’s first meaningful foray into the coffee market as it seeks to diversify in the face of a market-wide slowdown in sales for fizzy, sugary beverages.
The deal is expected to cause a major shakeup in the coffee space, and be seen as a direct challenge to the dominance of Starbucks in the US. Costa Coffee has more UK stores than Starbucks, and prior to the takeover was already expanding globally.
In October 2017, Costa bought out Yueda, a Chinese coffee chain with which it had operated a joint venture in the country for over a decade.
As with all mega deals, both the buyer, Coca-Cola, and the seller, Whitbread, have instructed banks to provide both financing and advice on the deal.
Coca-Cola, the buyer, is solely using the services of British-based investment bank Rothschild & Co for the deal. Coca-Cola has previously used Rothschild in a series of major deals, including the 2015 merger of three major bottlers, which was valued at $US31 billion (€28 billion) at the time.
Unlike Coca-Cola, Whitbread has instructed several banks to advise on the deal, with Goldman Sachs, Morgan Stanley, and Deutsche Bank all getting a slice of the pie.
Goldman and Morgan Stanley will act as joint financial advisers and joint sponsors on the deal, while Deutsche Bank’s London operation will act as a financial adviser. Morgan Stanley and Deutsche Bank are also acting as corporate brokers.
Coca-Cola will receive legal advice from Clifford Chance and tax advice from US law firm Skadden, Arps, Slate, Meagher & Flom. Whitbread’s legal advice comes from Slaughter & May.
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