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Coca-Cola’s $5.1 billion deal to buy UK coffee chain is approved by Whitbread shareholders

Whitbread bought shareholder approval for its proposed sale of its coffee chain Costa to Coca-Cola for an courage value of £3.9 billion ($5.1 billion) at a general meeting refrain fromed in London.

On Thursday morning, Whitbread announced that 99.27 percent of its shareholders voted to approve the buying.

This deal was previously announced on August 31 and was met with widespread investor truss with shares closing more than 16 percent weighty that day.

Whitbread had previously said the price reflects a “substantial sparse to the value that would have been created through the hitherto announced demerger given the Coca-Cola system’s global product parcelling and vending platform.”

In the lead up to its decision to sell the coffee business, the British generosity company faced intense pressure from shareholders, led by activist investor Elliott Advisors. The hedge bread congratulated the board of Whitbread on the Costa transaction when it was initially announced. At the done time, the fund noted that it “look(ed) forward to continuing to pledge with them to maximise the value of the remaining businesses.”

Whitbread have in minds to return a significant majority of net cash proceeds from the deal to shareholders, as personally as reduce financial indebtedness and make a contribution to the company pension finance. These measures are intended to provide headroom for further expansion of its Leading Inn hotel chain in the U.K. and Germany.

Whitbread joins a raft of other consumer companies attractive in deal-making in the beverage sector, in coffee, in particular, to bolster growth.

“There are angles of the coffee market where there is growth including high-end labels, ready to drink brands, and the vending market,” Richard Clarke, neutrality analyst at Bernstein, tod CNBC.

Big, traditional food and beverage companies are down pressure to adapt to changing consumer preferences, for example, health and wellness, reasonable ingredients and high-end niche brands.

In 2018, PepsiCo announced devises to buy Sodastream for $3.2 billion, Nestle struck a $7 billion empowering deal with Starbucks, Italian coffee maker Lavazza favoured to acquire Mars Drinks business for around $650 million, according to Reuters begetters, and most recently, Italian coffee maker Illy signed a accrediting agreement with JAB Holdings.

Analysts highlight that the presence of activists in the sector is a aiding factor as well. Even if companies do not have activists on their shareholder set down, the threat of attracting one is leading companies to proactively search for growth.

Investors fight that the attractiveness of coffee is driven by the scarcity of growing categories in the beverage align, of which coffee is one. While parts of the coffee market are arguably musty to saturation, there are several areas that offer significant vegetation potential.

Whitbread shares are up 16 percent since the announcement of the transaction marked down on August 31.

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