The deal, expected to complete in the first half of 2019, plugs a big hole in Coca-Cola's portfolio.
Coca-Cola Co (KO.N) has agreed to buy the world's second largest coffee chain Costa from Britain's Whitbread Plc (WTB.L) for $5.1 billion including debt, opening a new front in its push into healthier markets.
Coca-Cola is increasing its caffeine quotient with plans to acquire the Costa coffee chain of the United Kingdom for $5.1 billion. It has since grown from 39 outlets to more than 2,400 coffee shops in the United Kingdom and 1,400 in 31 overseas markets.
The research firm Mintel estimated that the global coffee shops market was worth £127.3bn ($165bn) in 2017, while another £43.2bn ($56bn) worth was sold in shops - whether as beans or the increasingly popular pods used by consumers playing barista at home.
Coca-Cola boss James Quincey said: "Costa gives Coca-Cola new capabilities and expertise in coffee, and our system can create opportunities to grow the Costa brand worldwide".
"Hot beverages is one of the few segments of the total beverage landscape where Coca-Cola does not have a global brand".
After missing out on the heady growth phase of coffee shops, Coca-Cola is entering when the market in countries like the United Kingdom and the U.S.is crowded. Earlier this month, PepsiCo agreed to pay $US3.2 billion for SodaStream, which makes carbonated-water dispensers.
For Costa, Hyett said Costa will get "lots of care and attention" from Coca- Cola.
Whitbread's share price was up nearly 16 per cent to £46.56 following the announcement, while London's benchmark FTSE 100 index on which it trades was down 0.3 per cent. "A significant majority" of the proceeds will be given to the shareholders, the firm added. Whitbread said in April that it would spin off Costa as an independent publicly traded company, turning its focus to its Premier Inn hotel operations under pressure from activist investors.
Coca-Cola shares were slightly down Friday in mid-morning trading.