Coffee Nation bought by Whitbread for £59.5m
Whitbread plans to roll-out Costa Express outlets across UK
Coffee Nation, the ‘on the go’ provider of gourmet coffee, has been bought by hotel and restaurant group Whitbread for £59.5m in cash.
Whitbread, which owns Premier Inn hotels and Costa Coffee, has acquired Coffee Nation from Milestone Capital and Investec Growth & Acquisition Finance and members of the existing management team. According to Investec, it has successfully exited its preferred equity investment in Coffee Nation, generating a 27% return.
Whitbread has bought the entire issued share capital of the Coffee Nation chain, including the repayment of company’s existing debt. It is thought the hospitality giant will use the acquisition to expand its ‘on the go’ coffee chain Costa Express by opening 3,000 outlets across the UK over the next five years.
Andy Harrison, chief executive of Whitbread PLC said: “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.”
Scott Martin, chief executive and co-founder of Coffee Nation, said, “We are delighted with this deal, which will provide a real opportunity to develop the coffee on the go market in the UK.
“Over the last 11 years, Coffee Nation has worked tirelessly to develop our product, build a loyal customer base and develop a strong network of partners.”
In March 2008, Milestone Capital Partners led the £24m secondary management buyout of Coffee Nation, backing the existing management team. Investec provided a preferred equity investment of £5.25m in support of their bid.
James Stirling from Investec commented: “Since we supported the management buy-out in 2008, against the backdrop of an uncertain economic environment, Coffee Nation has experienced significant growth in earnings and consolidated its position as the leader in its market segment, confirming the resilience of its business model.”
© Crimson Business. Ltd 2011