Whitbread buys out Costa partner in South China

Whitbread announced on Tuesday that its Costa division has acquired 49% of its South China joint venture from its partner, Yueda, for RMB 310m (£35m).

The FTSE 100 company said the acquisition would provide full ownership in the “important growth market”, and was in line with its strategy to focus on key international opportunities.

Costa currently owns 51% of the joint venture, which operates 252 stores in the south of China, including 93 stores in Shanghai.

“One of our three key strategic priorities is to focus on our strengths to grow internationally and today's announcement marks a significant and exciting step in our ambitious growth plans for China,” said Whitbread CEO Alison Brittain.

“We have enjoyed an excellent partnership with Yueda over the past ten years together beginning to build the Costa brand in this key market.”

Brittain said the coffee shop market in China was “highly attractive”, with a “compelling opportunity” for Costa to grow its presence over the longer term.

“This acquisition gives us full strategic and funding flexibility to unlock Costa's potential in China, providing a strong platform to facilitate future growth, enhance the customer experience and make Costa the coffee shop of choice in this fast-growing market.

“We remain fully committed to our strong partnership with BHG in Northern China and look forward to building our business with them in the years ahead.”

The South China business would continue to be consolidated in Costa and Whitbread financial accounts, the Whitbread board said.

It added that the purchase remained subject to final government registration formalities, with the aim to complete the transaction as soon as practicable.

The existing joint venture in the north of China, which is a 50/50 partnership with BHG, was unaffected by the transaction.