Whitbread PLC (LON:WTB) has received clearance from the Chinese authorities for the sale of its Costa Coffee arm, including its Chinese operation, to beverage giant Coca-Cola Co (NYSE:KO).
The FTSE 100 firm, which also owns budget hotel chain Premier Inn, said it had received clearance from China’s State Administration for Market Regulation to sell its Costa operations in the country, although it added that it still required clearance from the European Union under the EC Merger Regulation before the entire transaction could complete.
READ: Whitbread shares froth higher as it agrees to sell Costa coffee to Coca-Cola for £3.9bn
Whitbread also said certain deliverables remained outstanding for the sale, including an agreement with the trustees of the pension fund.
The firm originally agreed to sell Costa to Coke at the end of August in a £3.9bn deal after it caved to pressure from activist investors Elliott Advisors and Sachem Head, to either sell or spin-off the coffee chain.
At the time, Whitbread said it planned to return a “significant majority” of proceeds from the disposal to shareholders. Net cash proceeds are estimated to be £3.8bn after transaction and separation costs.
It will also use some of the proceeds to reduce debt and to fund its pension scheme, providing extra headroom for the expansion of Premier Inn in the UK and Germany.
The deal is expected to be completed in the first half of 2019, subject to shareholder and regulatory approvals.
Whitbread bought Costa for £19mln in 1995 when the business had just 39 outlets. It is now the UK's largest coffee chain with more than 2,400 UK coffee shops and 1,400 outlets in 31 overseas markets. Costa Express has 8,237 vending machines across the globe.
In early-afternoon trading Thursday, Whitbread shares were down 0.8% at 4,665p.