Costa has almost 4,000 stores across 32 countries.
The acquisition adds a "scalable" coffee platform with critical know-how and expertise in a fast-growing, on-trend category, and expands Coca-Cola's existing coffee line up, which now includes Japanese coffee brand Georgia.
Beyond coffee shops, Coca-Cola CEO James Quincey, himself a Briton who is familiar with the Costa brand, said Costa would provide an important growth platform ranging from beans to bottled drinks in what is one of the world's fastest-growing drink categories, growing 6%. "Costa gives us access to this market with a strong coffee platform", he added.
Earlier this year, Nestle and Starbucks agreed a $7.2 billion global coffee alliance, which will see Nestle market, sell and distribute Starbucks products outside its stores worldwide.
The soda giant said Friday it is spending 3.9 billion pounds ($5.1 billion) in cash for Britain's biggest coffee company. JAB Holdings, an investment holding company, has been buying up businesses and brands associated with Peet's, Caribou, Stumptown and Krispy Kreme Doughnuts.
Coca-Cola, which has over 500 brands in its stable including Fanta, innocent smoothies and Powerade sports drinks, certainly has the deep pockets to help push Costa on the world stage.
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Whitbread had bought Costa for 19 million pounds in 1995, when it had just 39 shops.
Premier Inn has 785 hotels in the United Kingdom and a sprinkling of others in Germany and the Middle East. According to the press statement, the transaction is expected to close in the first half of 2019.
Then Coca-Cola got in touch with what Whitbread said was a "highly compelling" offer.
Whitbread will use a "significant majority" of the net cash proceeds around 3.8 billion pounds after taking into account such things as transaction costs returning cash to shareholders.
Whitbread shares soared almost 20% in early morning trade, catapulting it to the top of the FTSE 100.
"However, the growth story needs to be looked at because Whitbread has made a decision to change tack, shifting away from a demerger that it said would let the coffee and hotel chains grow more rapidly in favour of a quick sale". Some will be used to pay down debt and make a pension fund contribution.