1. 'A huge premium': Here's how Analysts are Reacting to Coca-Cola's Deal to Buy Costa Coffee

    'A huge premium': Here's how Analysts are Reacting to Coca-Cola's Deal to Buy Costa Coffee

    Coca-Cola on Friday announced a surprise move to buy Costa Coffee, one of Europe's largest cafe chains, from current owners Whitbread for £3.9 billion ($5.1 billion)...

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    1. A huge premium to that implied by the market: We valued Costa at £2.5bn in our 5280p SOTP based on a 10x 2019E EBITDA multiple.
    2. This is a bitter sweet moment for Whitbread investors.
    3. Hot beverages are one of the few remaining segments of the total beverage landscape where Coca-Cola does not have a global brand and Costa gives them access to this market through a strong coffee platform.
    4. As changes of direction go, the announcement by Whitbread CEO Allison Brittain that the company is selling Costa to Coca-Cola for £3.9bn, rather than plan announced in April to spin it off and list it as a publicly traded company is one deserving of kudos.
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