To get through this last workday before the long weekend, Coke’s management just ordered up a whole lotta coffee.
Those big shots in Atlanta KO, -0.84% plan to buy British coffee-shop chain Costa for $5.1 billion, taking it over from Whitbread WTB, +16.39% a U.K. FTSE 100 component that has been jolted higher by the news.
What’s the deal with this deal?
Coke, “like a lot of its peers, is looking to diversify away from its core business of sugary drinks, an area that has been increasingly attracting government ire due to a rising global obesity problem,” says Michael Hewson, chief market analyst at CMC Markets UK, for our call of the day.
A growing number of U.S. cities, for example, have levied special taxes on sodas and other sugary beverages.
Hewson warns that the coffee business is “extremely competitive,” and he notes that the acquisition follows PepsiCo.’s PEP, -0.08% move to branch out in a different way with the agreement earlier this month to buy home-carbonation company SodaStream SODA, +0.12% (Campbell Soup’s CPB, -2.10% new strategic direction, meanwhile, is to get out of fresh food.)
See: Pepsi will buy SodaStream, in extended shift away from sugary drinks
Coke has jumped on the chance to “gain an attractive brand with a fast-growing global presence,” writes Neil Wilson, Markets.com’s chief market analyst.
The seller of Sprite and Powerade seems to think “this is the ideal way into a frothy market that it’s maybe missed out on so far,” Wilson adds.
Costa, a rival to Starbucks SBUX, -0.28% in the U.K., has more than 2,400 coffee shops in its home country, along with more than 1,400 retail outlets in other nations. It also sells coffee in grocery stores and gas stations.
Is this big trouble for Starbucks? Traders don’t seem to think so at the moment, as the Seattle company’s shares are only edging lower in thin premarket trading.
Coke has ventured into coffee before, including acquiring a minority stake in once-hot Keurig Green Mountain whose share price then struggled. That company is now owned by an investor group led by JAB Holding Co.
Key market gauges
Futures for the Dow YMU8, -0.11% S&P 500 ESU8, -0.10% and Nasdaq-100 NQU8, -0.06% are little changed, after the Dow DJIA, -0.53% S&P SPX, -0.44% and Nasdaq Composite COMP, -0.26% lost ground yesterday.
The three gauges are on track for weekly advances of 0.8% to 1.8% as of Thursday’s close, along with August gains of 2.3% to 5.5%, with one day left in the month.
Europe SXXP, -0.60% and Asia stock markets have largely been seas of red, and analysts are blaming news that President Donald Trump could push forward soon with tariffs against China. Gold GCZ8, +0.66% is higher, while oil CLV8, -0.67% and the dollar index DXY, -0.03% are lower. Bitcoin BTCUSD, +0.57% is trading around $6,900.
See the Market Snapshot column for the latest action.
Check out: Which markets are closed for Labor Day?
The chart
LULU FTW, again.
Lululemon’s stock LULU, -1.23% is stretching higher in premarket action following the retailer’s earnings beat late Thursday.
If the bullish moves hold, shares ought to notch a fresh all-time high today. They’ve more than doubled over the past 12 months, and bulls are loving it:
$LULU I like the way this CEO is staying out of the way. He's Ronnie Turcotte on Secretariat. Let it run and don't fall off. pic.twitter.com/0w9YPl2HYF
— Jeff Macke (@JeffMacke) August 30, 2018 The buzz
Smith & Wesson parent America Outdoor Brands Corp. AOBC, -3.46% looks on track for a big up day after its earnings late yesterday, while Nutanix NTNX, -0.51% and Ulta Beauty ULTA, +1.11% appear headed in the other direction.
“Bitcoin and other cryptocurrencies are useless,” says the latest issue of The Economist magazine. “For blockchains, the jury is still out.”
Shortly after the opening bell, watch for a reading on Chicagoland’s business conditions as well as a figure for consumer sentiment.
Check out: MarketWatch’s Economic Calendar
At least seven people were killed and dozens injured in a crash in New Mexico involving an LA-bound Greyhound bus and a big rig.
The quote
Getty Images
People prepare a makeshift memorial on Thursday in Detroit.
“If there were ever a moment for us to talk and sit down and reflect about who we are, where we came from and where we’re going, this weekend should give us that moment.”—Texas Christian University assistant dean Ron Pitcock is quoted in an AP essay that says memorial services for Aretha Franklin and John McCain ought to inspire some national soul-searching.
The essay also says Franklin and McCain “exit the stage together in an American moment not unlike the period when each emerged. Fifty years after the cataclysmic year of 1968, today we are in a similar period of upheaval and polarization — a time when American society’s foundational pillars are being questioned and people of all political persuasions are deeply angry and uncertain about the nation’s path.”
“Rest in Peace, you were our greatest treasure.”
You can share messages and condolences to the McCain family at East Lawn Palms Mortuary & Cemetery. The book for the late Senator John McCain will be here until September 3rd and then sent to his family. pic.twitter.com/eBPHeehXx1
— Melissa Egan - Tucson News Now (@_MelissaEgan) August 31, 2018
Random reads
It took 1 million Legos to make this life-size, drivable Bugatti car.
This striking photo shows a member of Trump’s entourage blocking a photographer’s camera.
Oh my goodness. Purdue’s Rondale Moore has moves. pic.twitter.com/Pdf4dohHVL
— Max Olson (@max_olson) August 31, 2018
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