Whitbread buys Coffee Nation for £59.5m
Costa announced today the acquisition of Coffee Nation and its plan to launch a new brand, Costa Express which will target the self-serve coffee bar sector, providing great tasting Costa coffee on the go.
Costa is the UK’s largest and fastest-growing coffee shop brand with over 1850 stores, 1200 in the UK and a further 650 internationally. This acquisition provides Costa with access to new types of location and creates a growth opportunity in the UK’s emerging self-serve coffee bar sector, which currently comprises c.2000 units of which Coffee Nation operates 900. Costa will use the purchase of Coffee Nation to develop Costa Express and is targeting 3000 bars across the UK over the next five years, capable of quadrupling its profit contribution. This is in addition to Costa's continuing rapid growth of its store network.
Coffee Nation’s self-serve coffee bars are fundamentally different from typical hot drink vending machines because they use fresh milk and freshly ground coffee. Costa Express coffee will be provided by the Costa Roastery in London. Coffee Nation’s unique combination of innovative machine technology and advanced monitoring systems gives considerable competitive advantage and they have established a quality customer base including Tesco, Moto and Welcome Break.
Commenting on the acquisition, Andy Harrison, Chief Executive of Whitbread PLC said: “Customers increasingly want great tasting coffee on the go, which makes the self-serve coffee market very attractive. This acquisition provides an exciting launch pad to develop 3000 Costa Express bars across the UK, providing an additional growth lever for the Costa brand and making Costa available to more customers in more locations.”
Costa Limited, a wholly owned subsidiary of Whitbread, the UK’s largest hotel and restaurant group, will purchase Coffee Nation from Milestone Capital and Investec Growth & Acquisition Finance and members of the existing management team. Costa is paying £59.5m in cash for the entire issued share capital of Coffee Nation including the repayment of Coffee Nation’s existing debt.