The Coca-Cola Company (NYSE:KO) entered into definitive agreement to acquire Costa Limited from Whitbread PLC (LSE:WTB) for £3.8 billion on August 31, 2018. The consideration is subject to adjustment for estimated transaction costs and separation costs. Whitbread and Coca-Cola have also entered into a transitional services agreement, under which Whitbread has agreed to provide various services including IT, procurement and HR services to Coca-Cola for 12-24 months. Net cash proceeds expected to be approximately £3.8 billion at completion, after adjusting for estimated transaction costs and separation costs of £100 million. The transaction will be funded from cash and cash equivalents and marketable securities.

The transaction represents a multiple of 16.4 times of EBITDA for year 2018. For the year ended March 31, 2018, Costa Limited reported revenue of £1.3 billion, EBITDA of £238 million, Operating profit of £123 million, profit before tax of £158 million and had gross assets of £547 million. Dominic Paul, Managing Director of Costa Limited, and team will remain in place. Dominic Paul will no longer be a member of the Whitbread Executive Committee. The transaction is subject to the approval of Whitbread's shareholders, which is expected to take place by mid-October 2018, and various other approvals, including two anti-trust regulatory approvals, in the European Union and China. The transaction has been unanimously approved by Whitbread Board. On October 10, 2018, shareholders of Whitbread has approved the deal. As on November 29, 2018, Whitbread PLC is pleased to announce that clearance has been received from China's State Administration for Market Regulation for The Coca-Cola Company to acquire Costa Limited, including its operations in China. Clearance is still required from the European Union under the EC Merger Regulation before the transaction can complete and certain completion deliverables remain outstanding including an agreement still to be reached with the Trustees of the pension fund. As of December 21, 2018, the transaction has been approved by EU Commission. The transaction is expected to complete in the first half of year 2019. As of December 21, 2018, the transaction is expected to close in January 2019. A significant majority of net cash proceeds intended to be returned to shareholders and Whitbread will also reduce financial indebtedness and make a contribution to the pension fund, which will both provide headroom for further expansion of Premier Inn in the UK and Germany. Coca-Cola expects the transaction to be slightly accretive in the first full year, not taking into account any impact from purchase accounting.

Anthony Gutman of Goldman Sachs International and Morgan Stanley & Co. International plc, London Branch acted as financial advisors and sponsors whereas Deutsche Bank AG acted as financial advisor, Chris Vaughan, Russell Fairhurst and Sunita Savjani of Slaughter and May acted as legal advisors while Morgan Stanley and Deutsche Bank acted as corporate brokers to Whitbread PLC. Rothschild Inc. acted as financial advisor whereas Alex Jupp, Elizabeth Spencer, David Rievman, B. Chase Wink and Michael Cardella of Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisors to The Coca-Cola Company. N M Rothschild acted as a financial advisor to Coca-Cola and company. Philip J. Boeckman and Richard Hall of Cravath, Swaine & Moore LLP acted as legal advisor to Whitbread PLC. Gareth Camp, Laurence Feeny and Robert Crothers of Clifford Chance London and Hong Kong acted as legal advisors for The Coca-Cola Company.

The Coca-Cola Company (NYSE:KO) completed the acquisition of Costa Limited from Whitbread PLC (LSE:WTB) for £3.9 billion on January 3, 2019.