Coca-Cola kicks off $5.1 billion Costa deal

[trade247]

https://www.reuters.com/article/us-whitbread-m-a-coca-cola/coca-cola-takes-big-step-into-coffee-with-5-1-billion-costa-deal-idUSKCN1LG0LG

[rimmy2000]

this is interesting. WHitbread had stated earlier in the year they were planning to separate the business. There was talk about floating it asits own business as it was undervalued.

 

I watched WTB at open and it *appeared* as though the shares could briefly be bought around the £40 mark. Which I was scratching my head wondering why there was no premium added to the share price at open. I nearly took at opening position. The shares are trading around £48 now so I am kicking myself for not seeing if I could have bought at the pre marked up price. anyway, it was puzzling.

For me this has wider implications about the state of the overall market. That namely being a) there are large deals being done where inherent value is not recognised in a stock's price. b) it gives us an indication perhaps of the attitude of large US suitors who can take advantage of a relative weakness in Sterling vs USD to make deals more affordable. c) it tells how companies are using their cash reserves and broadening their bases.

These factors give me encouragement for a share I continue to hold and have written about at length on the forums. I see the effect of Trump-onomics (i made that up, btw) and especially legislation changes and the currency situation making it favourable that a US suitor will pick up WMH at some point (or at least bid for it) I don't want to hijack this thread and discuss WMH though.

Same could be said of a number of other UK equities. I know one poster here has called FEVR short on valuation grounds. I agree with their rationale but look what happens when a bid comes out of the blue. Being short can be dangerous in such situations so is one thing to bear in mind.

Anyway, talking of takeovers, I am mulling over heading to RBG for a spot of lunch and research to see how a the London sites are faring. This had a bid of 203p last year and is now down to around 118p following the rejection of the offer. Where there's smoke there's usually fire etc.

As a closing point it is worth considering (certainly with any collapse or shock in the market) adding stocks like KO (Coca Cola) to a portfolio. It has had a remarkable history and although it divides opinion one thing is clear: the company is here to stay, despite sugar taxes and what-have-you, it is now diversifying into Coffee Chains so is certainly one to buy, in my opinion, if the market sees any correction. These are the sort of buy and hold/pension-type stocks.

[Guest TimP]

• Costa Coffee, far and away the biggest coffee chain in the UK, has 4000 stores in 32 countries
• Founded in London, it has a growing presence in China, and strong positions in Europe, Asia and the Middle East
• The move follows PepsiCo’s purchase of seltzer-machine maker Sodastream for $3.2bn earlier this month

 

Edited August 31, 2018 by TimP

[JamesIG]

great (and in depth) article on last weeks news by one of our analysts here. At nearly 4000 words, pictures, charts and tables you really will be up to speed on this one!

https://www.ig.com/uk/shares-news/coca-cola-buys-costa-coffee--everything-you-need-to-know-180904 

[trade247]

welp.... that's a read for the way home isn't it!