Coca-Cola Costa Coffee deal and banks advising

Coca-Cola/YouTube

• Coca-Cola is buying UK-based coffee-giant Costa Coffee
  for $5.1 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 $5.1
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
$31 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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