Offer for coffeeheaven intern

RNS Number : 1079E

Whitbread PLC

15 December 2009

Not for release, publication or distribution, in whole or in part, in or into or from Canada, Australia OR Japan or any other jurisdiction where it would be unlawful to do so

15 December 2009

Recommended cash offer
for
coffeeheaven international plc ("coffeeheaven")
by
Costa Limited ("Costa"),
a wholly-owned subsidiary of Whitbread PLC ("Whitbread")

Summary

The boards of directors of Costa and coffeeheaven announce that they have reached agreement on the terms of a recommended cash offer for the entire existing issued and to be issued share capital of coffeeheaven, to be made by Costa, a wholly-owned subsidiary of Whitbread, the UK's largest hotel and restaurant group.
The proposed acquisition of coffeeheaven provides an attractive route to bring scale and an established Central and Eastern European platform for Costa's continued international expansion.
The coffeeheaven Group operates 90 coffee shops in Central and Eastern Europe comprising 62 shops in Poland, 14 shops in the Czech Republic and 14 shops across Bulgaria, Hungary and Latvia.
coffeeheaven will be managed as a subsidiary of Costa, the second-largest premium international coffee shop brand; with stores in the UK and 25 countries outside the United Kingdom.
The Offer will be 24 pence in cash for each coffeeheaven Share and values coffeeheaven's entire existing issued and to be issued share capital at approximately £36 million, representing:
a premium of approximately 25 per cent. to the Closing Price of 19.25 pence per coffeeheaven Share on 11 June 2009, being the last Business Day prior to the announcement by coffeeheaven that it had initiated early stage preliminary discussions which may or may not lead to an offer being made for coffeeheaven;
a premium of approximately 129 per cent. to the lowest Closing Price at which the coffeeheaven Shares traded during 2009 of 10.50 pence per coffeeheaven Share on 17 March 2009;
a premium of approximately 22 per cent. to the Closing Price of 19.75 pence per coffeeheaven Share on 10 December 2009, being the last Business Day prior to the announcement on 11 December 2009 that coffeeheaven was in advanced discussions with Whitbread that may lead to an offer being made for the coffeeheaven Shares at a price of 24 pence per coffeeheaven Share; and
a premium of approximately 8 per cent. to the Closing Price of 22.25 pence per coffeeheaven Share on the last Business Day prior to this announcement.
Costa has received irrevocable undertakings from all of the coffeeheaven Directors and certain other shareholders to accept the offer in respect of, in aggregate, 28,447,593 coffeeheaven Shares, representing approximately 18.98 per cent. of the existing issued and to be issued share capital of coffeeheaven. Certain of these irrevocable undertakings are also in respect of coffeeheaven Shares that may be issued to, or acquired by, coffeeheaven Directors pursuant to the terms of the coffeeheaven Share Schemes. Further details of these irrevocable undertakings are set out in Appendix 3 of this announcement including details of the circumstances in which each of the irrevocable undertakings will lapse.
The coffeeheaven Directors intend unanimously to recommend that coffeeheaven Shareholders accept the Offer, as they have irrevocably undertaken to do in respect of their own beneficial holdings of coffeeheaven Shares, together with coffeeheaven Shares that may be issued to, or acquired by, coffeeheaven Directors pursuant to the terms of the coffeeheaven Share Schemes amounting to, in aggregate, 23,671,472 issued and to be issued coffeeheaven Shares (and representing approximately 15.80 per cent. of the existing issued and to be issued share capital of coffeeheaven).

Commenting on the Offer, John Derkach, Managing Director of Costa said:

"This quality acquisition offers compelling shareholder, brand and operational benefits. It is an important step forward in achieving Costa's strategic objectives and international growth ambitions. This transaction will give Costa a strong position in the important and rapidly growing Central and Eastern European market, with clear opportunities for synergies as well as a new pipeline of stores for the future. The acquisition represents continued value growth for our shareholders."

Commenting on the Offer, Richard Worthington, Executive Chairman of coffeeheaven said:

"Since the opening of the first coffeeheaven store in 2000, our vision has been to build a market leading chain of branded coffee shops across Central and Eastern Europe, offering the highest quality products and outstanding customer service, all within a contemporary cafe setting designed specifically to appeal to the region's consumers. We believe that the offer from Costa announced today recognizes not only our commercial success but also the exceptional talent and achievement of the whole coffeeheaven team. Shareholders now have the opportunity to accept a cash offer for their shares at an attractive level compared to the share price prior to the commencement of the offer period. Further, the coffeeheaven business should benefit from the substantial resources available to Costa and our staff will have the opportunity to work within a much larger group to continue to grow and develop the business."

This summary should be read in conjunction with the attached announcement.

In accordance with Rule 19.11 of the City Code, a copy of this announcement will be available on Whitbread's website www.whitbread.co.uk and on coffeeheaven's website www.coffeeheaven.eu by no later than 12 noon on 16 December 2009.

Enquiries

Whitbread and Costa - 01582 844244

Christopher Rogers, Group Finance Director, Whitbread

Tabitha Aldrich Smith, Director of Communications, Whitbread

John Derkach, Managing Director, Costa

Deutsche Bank (financial adviser to Whitbread and Costa and corporate broker to Whitbread) - 020 7545 8000

James Arculus

James Cass
Martin Pengelley (corporate broking)

Tulchan (public relations adviser to Whitbread) - 020 7353 4200

David Allchurch

coffeeheaven - 07973 442 331

Richard Worthington

Shore Capital & Corporate Limited (Rule 3 adviser to coffeeheaven) - 020 7408 4090

Guy Peters

Stephane Auton

Akur Partners (financial adviser to coffeeheaven) - 020 7955 1427

Andrew Dawber

David Shapton

Opera Public Relations (public relations adviser to coffeeheaven) - 08450 600 650

Simon Turton

This announcement is not intended to and does not constitute or form any part of an offer to sell or an invitation to purchase or the solicitation of an offer to subscribe for any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the Offer or otherwise. The Offer will be made solely through the Offer Document and, in the case of certificated coffeeheaven Shares, the Form of Acceptance, which will together contain the full terms and conditions of the Offer, including details of how to accept the Offer. Any acceptance or other response to the Offer should be made only on the basis of the information contained in the Offer Document and, in the case of certificated coffeeheaven Shares, the Form of Acceptance.

Deutsche Bank AG is authorised under German Banking Law (competent authority: BaFin - Federal Financial Supervisory Authority) and authorised and subject to limited regulation by the FSA. Details about the extent of Deutsche Bank AG's authorisation and regulation by the FSA are available on request. Deutsche Bank AG (London Branch) is acting as financial adviser to Whitbread and Costa and no one else in connection with the contents of this announcement and will not be responsible to anyone other than Whitbread and Costa for providing the protections afforded to the clients of Deutsche Bank AG (London Branch) nor for providing advice in relation to any matter referred to herein.

Shore Capital & Corporate Limited, which is authorised and regulated in the United Kingdom by the FSA, is acting exclusively for coffeeheaven and no one else in connection with the contents of this announcement, and accordingly, Shore Capital will not be responsible to anyone other than coffeeheaven for providing the protections offered to clients of Shore Capital nor for providing advice in relation to any matter referred to herein.

Akur Partners is acting exclusively for coffeeheaven and no one else in connection with the contents of this announcement, the Form of Acceptance and the Offer, and accordingly, Akur Partners will not be responsible to anyone other than coffeeheaven for providing the protections offered to clients of Akur Partners nor for providing advice in relation to any matter referred to herein.

US securities laws

The Offer is for the securities of a corporation organised under the laws of England and is subject to the procedure and disclosure requirements of the United Kingdom, which are different from those of the United States. The Offer is being made in the United States pursuant to the "Tier 1" exemptions provided by Rule 14d-1 (c) under the Exchange Act and otherwise in accordance with the requirements of the City Code. Accordingly, the Offer is subject to disclosure and other procedural requirements, including with respect to withdrawal rights, the offer timetable, settlement procedures and timing of payments that are different from those that would be applicable with respect to a tender offer for an issuer listed in the US. In particular, the Offer is not subject to the SEC's filing or disclosure requirements.

It may be difficult for US holders of coffeeheaven Shares and other securities to enforce their rights arising out of the US federal securities laws, since Costa and coffeeheaven are incorporated outside of the United States, and some or all of their respective officers and directors may be resident outside of the United States. US holders of coffeeheaven Shares may not be able to sue a foreign company or its officers or directors in a foreign court for violations of the US securities laws. Further, it may be difficult to compel a foreign company and its affiliates to subject themselves to a US court's judgment.

To the extent permitted by applicable law, in accordance with, and to the extent permitted by, the City Code and normal UK market practice and Rule 14e-5 under the Exchange Act, Costa, Whitbread or its nominees or brokers (acting as agents) or their respective affiliates may from time to time make certain purchases of, or arrangements to purchase, coffeeheaven Shares, other than pursuant to the Offer, before or during the period in which the Offer remains open for acceptance. These purchases may occur either in the open market at prevailing prices or in private transactions at negotiated prices. Such purchases, or arrangements to purchase, will comply with all applicable UK rules, including the City Code and the rules of the London Stock Exchange, and Rule 14e-5 under the Exchange Act to the extent applicable. In addition, in accordance with, and to the extent permitted by, the City Code, normal UK market practice and Rule 14e-5 under the Exchange Act, Deutsche Bank and their respective affiliates will continue to act as exempt principal traders in coffeeheaven Shares on the London Stock Exchange and engage in certain other purchasing activities consistent with their respective normal and usual practice and applicable law, including Rule 14e-5 under the Exchange Act. Any information about such purchases will be disclosed on a next Business Day basis to the Panel and will be available from any Regulatory Information Service including the Regulatory News Service on the London Stock Exchange website, www.londonstockexchange.com.

The distribution of this announcement in jurisdictions other than the United Kingdom or the United States may be restricted by the laws of those jurisdictions and therefore persons into whose possession this announcement comes should inform themselves about, and observe any such restrictions. Failure to comply with any such restrictions may constitute a violation of the securities laws of any such jurisdiction.

Unless otherwise determined by Costa, the Offer is not being, and will not be, made, directly or indirectly, in or into or by the use of the mails of, or by any other means (including, without limitation, electronic mail, facsimile transmission, telex, telephone, internet or other forms of electronic communication) of interstate or foreign commerce of, or any facility of a national securities exchange of any Restricted Jurisdiction (as defined herein) and will not be capable of acceptance by any such use, means or facility or from within any such Restricted Jurisdiction. Accordingly, unless otherwise determined by Costa, copies of this announcement and any other documentation relating to the Offer are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any Restricted Jurisdiction and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send any such documents in or into or from any such Restricted Jurisdiction, as doing so may invalidate any purported acceptance of the Offer. Any person (including, without limitation, custodians, nominees and trustees) who would, or otherwise intends to, or who may have a contractual or legal obligation to, forward this announcement and/or any other related document to any jurisdiction outside the United Kingdom or the United States should inform themselves of, and observe, any applicable legal or regulatory requirements of any relevant jurisdiction. Neither the SEC nor any US state securities commission has approved or disapproved the Offer or passed upon the adequacy or completeness of this announcement or any other documentation relating to the Offer (including, without limitation, the Offer Document or the Form of Acceptance). Any representation to the contrary is a criminal offence.

It is the responsibility of each Overseas Shareholder to inform himself, herself or itself about and observe any applicable legal requirements. No Overseas Shareholder receiving a copy of this announcement and/or any other documentation relating to the Offer in a Restricted Jurisdiction may treat the same as constituting an invitation or offer to him and in such circumstances, this announcement and/or any other documentation relating to the Offer are sent for information only. It is the responsibility of any Overseas Shareholder receiving a copy of this announcement and/or any other documentation relating to the Offer in any jurisdiction outside the United Kingdom and the United States who wishes to accept the Offer to satisfy himself as to the full observance of the laws and regulatory requirements of that jurisdiction in connection with the Offer, including obtaining any governmental, exchange control or other consents which may be required, and compliance with any other necessary formalities which need to be observed and the payment of any transfer or other taxes or duties that may be or become due under the laws of such jurisdiction. Any such Overseas Shareholder will be responsible for any such transfer or other taxes or duties by whomsoever payable and Costa and Whitbread (and any person acting on behalf of Costa or Whitbread) shall be fully indemnified and held harmless by such Overseas Shareholder for any such transfer or other taxes or duties or other requisite payments as Costa or Whitbread (and any person acting on behalf of Costa or Whitbread) may be required to pay.

This announcement has been prepared for the purpose of complying with English law and the City Code and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws of jurisdictions outside England, including those of the United States.

Dealing disclosure requirements

Under the provisions of Rule 8.3 of the Code, if any person is, or becomes, "interested" (directly or indirectly) in 1 per cent. or more of any class of "relevant securities" of coffeeheaven, all "dealings" in any "relevant securities" of that company (including by means of an option in respect of, or a derivative referenced to, any such "relevant securities") must be publicly disclosed by no later than 3.30 p.m. (London time) on the Business Day following the date of the relevant transaction. This requirement will continue until the date on which the Offer becomes, or is declared, unconditional as to acceptances, lapses or is otherwise withdrawn or on which the "Offer Period" otherwise ends. If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire an "interest" in "relevant securities" of coffeeheaven, they will be deemed to be a single person for the purpose of Rule 8.3.

Under the provisions of Rule 8.1 of the Code, all "dealings" in "relevant securities" of coffeeheaven by Costa, Whitbread or coffeeheaven, or by any of their respective "associates", must be disclosed by no later than 12.00 noon (London time) on the Business Day following the date of the relevant transaction.

A disclosure table, giving details of the companies in whose "relevant securities" "dealings" should be disclosed, and the number of such securities in issue, can be found on the Panel's website at www.thetakeoverpanel.org.uk.

"Interests in securities" arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of securities. In particular, a person will be treated as having an "interest" by virtue of the ownership or control of securities, or by virtue of any option in respect of, or derivative referenced to, securities.

Terms in quotation marks are defined in the Code, which can also be found on the Panel's website. If you are in any doubt as to whether or not you are required to disclose a "dealing" under Rule 8, you should consult the Panel.

Forward Looking Statements

This announcement includes certain "forward-looking statements". These statements are based on the current expectations of the management of coffeeheaven, Whitbread and Costa (as the case may be) and are naturally subject to uncertainty and changes in circumstances. The forward-looking statements contained herein may include statements about the expected effects on coffeeheaven, Whitbread and Costa (or, as the case may be, the coffeeheaven Group, the Whitbread Group or the Costa Group) of the Offer, the expected timing and scope of the Offer, strategic options and all other statements in this announcement other than historical facts. Without limitation, any statements preceded or followed by or that include the words "targets", "plans" "believes", "expects", "aims", "intends", "will", "may", "anticipates", "estimates", "projects" or, words or terms of similar substance or the negative thereof, are forward looking statements. Forward looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of Costa's, Whitbread's or coffeeheaven's (or, as the case may be, the coffeeheaven Group's, the Whitbread Group's or the Costa Group's) operations and potential synergies resulting from the Offer; and (iii) the effects of government regulation on Costa's, Whitbread's or coffeeheaven's (or, as the case may be, the coffeeheaven Group's, the Whitbread Group's or the Costa Group's) business. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, the satisfaction of the Conditions to the Offer, as well as additional factors, such as changes in economic conditions, changes in the level of capital investment, success of business and operating initiatives and restructuring objectives, customers' strategies and stability, changes in the regulatory environment, fluctuations in interest and exchange rates, the outcome of litigation, government actions and natural phenomena such as floods, earthquakes and hurricanes. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements. Neither coffeeheaven nor Whitbread nor Costa undertakes any obligation to update publicly or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.

This summary should be read in conjunction with the full text of this announcement. Appendix 1 to this announcement contains the conditions to, and certain further terms of, the Offer. Appendix 2 to this announcement contains further details of the sources of information and bases of calculations set out in this announcement, Appendix 3 contains a summary of the irrevocable undertakings given by the coffeeheaven Directors and certain other coffeeheaven Shareholders and Appendix 4 contains definitions of certain expressions used in this summary and in this announcement.

Not for release, publication or distribution, in whole or in part, in or into or from Canada, Australia OR Japan or any other jurisdiction where it would be unlawful to do so

15 December 2009

Recommended cash offer
for
coffeeheaven international plc ("coffeeheaven")
by
Costa Limited ("Costa"),
a wholly-owned subsidiary of Whitbread PLC ("Whitbread")

1. Introduction

The boards of directors of Costa and coffeeheaven announce that they have reached agreement on the terms of a recommended cash offer, to be made by Costa, a wholly-owned subsidiary of Whitbread, to acquire the whole of the existing issued and to be issued share capital of coffeeheaven which, at the time the Offer is made, is not already held by Costa or any of its associates.

2. The Offer

The Offer, which will be subject to the conditions and further terms set out in Appendix 1 and to be set out in the Offer Document, will be made on the following basis:

for each coffeeheaven Share

24 pence in cash

The Offer Price represents:

a premium of approximately 25 per cent. to the Closing Price of 19.25 pence per coffeeheaven Share on 11 June 2009, being the last Business Day prior to the announcement by coffeeheaven that it had initiated early stage preliminary discussions which may or may not lead to an offer being made for coffeeheaven;
a premium of approximately 129 per cent. to the lowest Closing Price at which the coffeeheaven Shares traded during 2009 of 10.50 pence per coffeeheaven Share on 17 March 2009;
a premium of approximately 22 per cent. to the Closing Price of 19.75 pence per coffeeheaven Share on 10 December 2009, being the last Business Day prior to the announcement on 11 December 2009 that coffeeheaven was in advanced discussions with Whitbread that may lead to an offer being made for the coffeeheaven Shares at a price of 24 pence per coffeeheaven Share; and
a premium of approximately 8 per cent. to the Closing Price of 22.25 pence per coffeeheaven Share on the last Business Day prior to this announcement.

The Offer values coffeeheaven's entire existing issued and to be issued share capital at approximately £36 million.

3. Irrevocable Undertakings

Costa has received irrevocable undertakings to accept the Offer from all of the coffeeheaven Directors in respect of their entire beneficial holdings of coffeeheaven Shares, together with coffeeheaven Shares that may be issued to, or acquired by, coffeeheaven Directors pursuant to the terms of the coffeeheaven Share Schemes amounting to, in aggregate, 23,671,472 issued and to be issued coffeeheaven Shares (and representing approximately 15.80 per cent. of the existing issued and to be issued share capital of coffeeheaven).

Furthermore, Costa has received irrevocable undertakings to accept, or procure acceptance of, the Offer from certain coffeeheaven Shareholders in respect of, in aggregate, 4,776,121 coffeeheaven Shares, representing approximately 3.19 per cent. of the existing issued and to be issued share capital of coffeeheaven.

Further details of these irrevocable undertakings are set out in Appendix 3 of this announcement including details of the circumstances in which each of the irrevocable undertakings will lapse.

Accordingly, subject to such irrevocable undertakings not having lapsed in accordance with their terms and therefore ceasing to be binding, Costa has received from the coffeeheaven Directors and certain coffeeheaven Shareholders, in aggregate, irrevocable undertakings to accept, or procure acceptance of, the Offer in respect of 28,447,593 coffeeheaven Shares (including coffeeheaven Shares that may be issued to, or acquired by, coffeeheaven Directors pursuant to the terms of the coffeeheaven Share Schemes), representing approximately 18.98 per cent. of the existing issued and to be issued share capital of coffeeheaven.

4. Information relating to the Whitbread Group

The Whitbread Group is the UK's largest hotel and restaurant company operating brands in the budget hotel, restaurant and coffee shop sectors. The Whitbread Group's brands include Premier Inn, Beefeater, Table Table, Brewers Fayre, Taybarns and Costa Coffee. The Whitbread Group employs over 33,000 people and serves around 9 million customers every month in its circa 1,900 outlets across the UK.

The Whitbread Group reported revenues in the first half of 2009/10 ended 27 August 2009 of £703.3 million (2008/09: £682.2 million) and operating pre-tax profit of £127.0 million (2008/09: £129.2 million), post exceptional costs but before financing costs.

5. Information relating to Costa

Costa, a wholly owned subsidiary of Whitbread, is the largest and fastest growing coffee shop chain in the UK. Costa was founded by Italian brothers Sergio and Bruno Costa in 1971. With over 1,000 stores in the UK and more than 400 internationally, Costa has enjoyed a remarkable period of growth since it opened its first store. Costa currently operates stores in the UK and in 25 countries outside the UK. All international stores are operated under franchise, in some cases via joint ventures with local partners.

Costa reported revenues in the first half of 2009/10 ended 27 August 2009 of £155.4 million (2008/09: £128.9 million) and a pre-exceptional operating profit of £12.6 million (2008/09: £7.3 million).

6. Information relating to coffeeheaven Group

The coffeeheaven Group owns and operates speciality branded coffee bars in Central and Eastern Europe principally under the coffeeheaven brand name. coffeeheaven is recognised as a leading coffee bar brand in Central and Eastern Europe, with stores in Poland, Czech Republic, Latvia (where it trades under the Coffee Nation brand), Bulgaria and Hungary.

The coffeeheaven Group opened its first store in Poland in August 2000. It opened its first store in the Czech Republic in 2004 and entered its third country, Latvia, in the same year, through the acquisition of seven Coffee Nation bars. As at 30 September 2009, the coffeeheaven Group had 90 coffee bars, of which 62 were in Poland, 14 in the Czech Republic, 7 in Latvia, 3 in Bulgaria and 4 in Hungary.

For the six month period ended 30 September 2009, coffeeheaven Group reported revenues of £12.5 million (2008: £11.9 million) representing a local currency growth rate of 16 per cent. and like for like sales growth of 5 per cent. Profit before taxation and non-cash share based payments was £0.2 million (2008: £0.1 million).

7. Background to and reasons for the Offer

The branded coffee shop sector has experienced rapid growth during the last five years, even during the toughest trading conditions for years. Over this time, Costa has grown to be a significant business for the Whitbread Group. Costa now delivers 22 per cent. of the Whitbread Group's sales, having grown at an average compound rate of 19 per cent. per year over the last five years.

Costa achieved outstanding performance in the first half for the six months ended 27 August 2009 with total sales up 20.6 per cent. at £155.4 million compared to the first half of 2008/09. This strong sales performance was derived from both new openings and transaction volumes, which, in the like for like estate, increased by 3.9 per cent. This strong performance demonstrates customers continued to respond well to Costa's focus on delivering excellent coffee, served by trained baristas.

Costa is now the second-largest premium international coffee shop brand; with stores in the UK and in 25 countries outside the United Kingdom. Costa believes that it still has significant opportunity to expand both in the UK and internationally. Internationally, Costa moved into profit in the first half of 2009/10 and is focusing on bringing scale to its Chinese, Russian and Central European businesses. The proposed acquisition of coffeeheaven Group provides an attractive route to accelerate the implementation of its strategy to bring scale to the Central and Eastern European market.

The combination of coffeeheaven Group's stores in Central and Eastern European markets and Costa's resources and track record of growth is expected to result in an established platform from which to expand the business in this region.

8. Background to and reasons for the recommendation

On 12 June 2009, coffeeheaven announced that it was undertaking a strategic review and that as part of such review it had entered into preliminary discussions which may or may not have led to an offer being made for coffeeheaven. coffeeheaven has received a firm cash offer to acquire coffeeheaven, to which the coffeeheaven Directors have given due and careful consideration.

In considering the merits of the Offer, the coffeeheaven Directors have taken into account:

the level of the Offer, providing coffeeheaven Shareholders with certainty of value at an attractive level, which reflects both the quality of the coffeeheaven business and its standing in its markets;
the confirmations received from Costa regarding the safeguarding of the existing employment rights of coffeeheaven Group's employees and the belief of Costa that there will be significant career development opportunities for coffeeheaven staff within Costa;
the confirmation received from Costa that it is not its current intention to dispose of CHI Polska S.A. or any substantial part of its business to any third party or of businesses within the coffeeheaven Group's other markets; and
the fact that the Offer will provide coffeeheaven with access to the substantial resources of Costa and whilst the coffeeheaven Directors are confident that the coffeeheaven Group could continue to develop successfully on a stand alone basis, the additional resources should enable that development to be enhanced.

The Offer provides coffeeheaven Shareholders with an opportunity to realise their investment in coffeeheaven for cash at a price that represents a premium of approximately:

25 per cent. to the Closing Price of 19.25 pence per coffeeheaven Share on 11 June 2009, being the last Business Day prior to the announcement by coffeeheaven that it had initiated early stage preliminary discussions which may or may not lead to an offer being made for coffeeheaven;
129 per cent. to the lowest Closing Price at which the coffeeheaven shares traded during 2009 of 10.50 pence per coffeeheaven Share on 17 March 2009;
22 per cent. to the Closing Price of 19.75 pence per coffeeheaven Share on 10 December 2009, being the last Business Day prior to the announcement on 11 December 2009 that coffeeheaven was in advanced discussions with Whitbread that may lead to an offer being made for the coffeeheaven Shares at a price of 24 pence per coffeeheaven Share; and
8 per cent. to the Closing Price of approximately 22.25 pence per coffeeheaven Share on the last Business Day prior to this announcement.

9. Recommendation

The coffeeheaven Directors, who have been so advised by Shore Capital, consider the terms of the Offer to be fair and reasonable. In providing advice to the coffeeheaven Directors, Shore Capital has taken account of the commercial assessments of the coffeeheaven Directors. Shore Capital is acting as the independent financial adviser to coffeeheaven for the purposes of providing independent advice to the coffeeheaven Directors on the Offer under Rule 3 of the City Code.

Accordingly, the coffeeheaven Directors intend unanimously to recommend that coffeeheaven Shareholders accept the Offer as they have irrevocably undertaken to do in respect of their own beneficial holdings of coffeeheaven Shares, together with coffeeheaven Shares that may be issued to, or acquired by, coffeeheaven Directors pursuant to the terms of the coffeeheaven Share Schemes amounting to, in aggregate, 23,671,472 issued and to be issued coffeeheaven Shares (and representing approximately 15.80 per cent. of the existing issued and to be issued share capital of coffeeheaven). Further details of these undertakings are set out in Appendix 3.

10. Financing of the Offer

The cash consideration payable by Costa under the terms of the Offer will be funded from Whitbread Group PLC's (a wholly-owned subsidiary of Whitbread) existing debt facilities. Deutsche Bank, financial adviser to Whitbread and Costa, confirms that it is satisfied that resources are available to Costa sufficient to satisfy full acceptance of the Offer.

11. Management, employees and locations

Management

Costa acknowledges the significant contribution made by the coffeeheaven Directors and the existing senior management to the coffeeheaven Group business. The coffeeheaven Directors have undertaken to Costa to resign from their offices as directors of coffeeheaven (and where appropriate all executive responsibilities within the coffeeheaven Group) upon the Offer becoming or being declared unconditional in all respects.

Employees

The existing employment rights of all of coffeeheaven Group's employees will be fully safeguarded upon the Offer becoming or being declared unconditional in all respects. Furthermore, Costa believes that there will be significant career development opportunities for coffeeheaven staff within Costa.

Locations

Costa can confirm that it is not its current intention to dispose of CHI Polska S.A. or any substantial part of its business to any third party, nor is it Costa's present intention to dispose of businesses within the coffeeheaven Group's other markets.

12. coffeeheaven Share Schemes

The Offer will extend to all coffeeheaven Shares unconditionally allotted or issued to satisfy the exercise of options granted under the coffeeheaven Share Schemes after the Announcement Date and before the date the Offer closes to acceptances (or such earlier date as Costa may, subject to the City Code and in accordance with the Conditions and further terms of the Offer, decide). Costa intends to make appropriate proposals to the holders of options and awards under the coffeeheaven Share Schemes in due course.

13. Disclosure of interests in coffeeheaven relevant securities

As at 11 December 2009, being the latest practicable date prior to the Announcement Date, and save as disclosed in this announcement, neither Whitbread nor Costa, nor any of the Whitbread Directors or Costa Directors, nor (so far as the Whitbread Directors or Costa Directors are aware having made due and careful enquiry) any person acting, or deemed to be acting, in concert (within the meaning of the City Code) with Whitbread or Costa:

(i) had an interest in, or a right to subscribe for, relevant securities of coffeeheaven;

(ii) had any short position in (whether conditional or absolute and whether in the money or otherwise), including any short position under a derivative, or was party to any agreement to sell, or was subject to any delivery obligation in respect of, or had the right to require another person to purchase or take delivery of, relevant securities of coffeeheaven;

(iii) had borrowed or lent any relevant securities of coffeeheaven (except for any borrowed shares which have been either on-lent or sold).

As at 11 December 2009, being the latest practicable date prior to the Announcement Date, and save as disclosed in this announcement, neither Whitbread nor Costa, nor (so far as the Whitbread Directors or Costa Directors are aware having made due and careful enquiry) any associate of Whitbread or Costa has procured an irrevocable commitment or letter of intent to accept the Offer in respect of relevant securities of coffeeheaven.

As to irrevocable commitments to accept the Offer in respect of relevant securities of coffeeheaven see Appendix 3.

In view of the requirement for confidentiality, Whitbread and Costa have not been able to ascertain the above information in respect of certain parties (other than Deutsche Bank) acting or deemed to be acting in concert (within the meaning of the City Code) with Whitbread or Costa for the purposes of the Offer.

14. Delisting, compulsory acquisition and re-registration

Assuming the Offer becomes or is declared unconditional in all respects, and provided that Costa has received valid acceptances or otherwise acquired in excess of 75 per cent. of the voting rights attached to the coffeeheaven Shares, Costa intends to procure coffeeheaven to apply to the London Stock Exchange for the cancellation of the admission to, and trading of the coffeeheaven Shares on, AIM and to notify (as defined in the AIM Rules) such intended cancellation.

Cancellation of admission to trading on AIM of the issued coffeeheaven Shares would significantly reduce the liquidity and marketability of any coffeeheaven Shares not assented to the Offer at that time and the value of any such coffeeheaven Shares may be affected as a consequence.

If Costa receives acceptances under the Offer in respect of, and/or otherwise acquires, 90 per cent. or more in value of the coffeeheaven Shares to which the Offer relates (and not less than 90 per cent. of the voting rights carried by coffeeheaven Shares), and if all other Conditions of the Offer have been satisfied or waived (to the extent that they are capable of being waived), Costa intends to exercise its rights pursuant to the provisions of Part 28 of the 2006 Act to acquire compulsorily any remaining coffeeheaven Shares in respect of which acceptances have not then been received on the same terms as the Offer.

It is also intended that, following the Offer becoming or being declared unconditional in all respects and after the cancellation of listing referred to above becoming effective, coffeeheaven will be re-registered as a private company under the relevant provisions of the 2006 Act.

15. General

The Offer Document is expected to be posted to coffeeheaven Shareholders (other than to coffeeheaven Shareholders or any nominee, custodian or trustee of such coffeeheaven Shareholders in Restricted Jurisdictions) as soon as practicable and in any event (save with the consent of the Panel) within 28 days of this announcement.

There are no agreements or arrangements to which Costa is a party which relate to the circumstances in which it may or may not invoke or seek to invoke a condition to the Offer.

Your attention is drawn to the further information contained in the Appendices which form part of, and should be read in conjunction with, this announcement.

The Offer will be subject to the conditions and further terms in relation to the Offer set out in Appendix 1 to this announcement. Appendix 2 to this announcement provides details of the bases of calculations and sources of certain information included in this announcement. Appendix 3 to this announcement contains details of the irrevocable undertakings received in relation to the Offer. Appendix 4 to this announcement contains definitions of certain terms used in this announcement.

US securities laws

Dealing disclosure requirements

Forward Looking Statements

Enquiries

Whitbread and Costa - 01582 844244

Christopher Rogers, Group Finance Director, Whitbread

Tabitha Aldrich Smith, Director of Communications, Whitbread

John Derkach, Managing Director, Costa

Deutsche Bank (financial adviser to Whitbread and Costa and corporate broker to Whitbread) - 020 7545 8000

James Arculus

James Cass
Martin Pengelley (corporate broking)

Tulchan (public relations adviser to Whitbread) - 020 7353 4200

David Allchurch

coffeeheaven - 07973 442 331

Richard Worthington

Shore Capital & Corporate Limited (Rule 3 adviser to coffeeheaven) - 020 7408 4090

Guy Peters

Stephane Auton

Akur Partners (financial adviser to coffeeheaven) - 020 7955 1427

Andrew Dawber

David Shapton

Opera Public Relations (public relations adviser to coffeeheaven) - 08450 600 650

Simon Turton

APPENDIX 1

CONDITIONS OF THE OFFER

1. Conditions of the Offer

The Offer will be subject to the following conditions:

(A) valid acceptances being received (and not, where permitted, withdrawn) by not later than 1.00 p.m. (London time) on the First Closing Date of the Offer (or such later time(s) and/or date(s) as Costa may, with the consent of the Panel or in accordance with the Code, decide) in respect of not less than 90 per cent. (or such lower percentage as Costa may decide) (i) in nominal value of the coffeeheaven Shares to which the Offer relates, and (ii) of the voting rights attached to those shares, provided that this condition shall not be satisfied unless Costa and/or any of its wholly-owned subsidiaries shall have acquired or agreed to acquire, whether pursuant to the Offer or otherwise, coffeeheaven Shares carrying in aggregate more than 50 per cent. of the voting rights then normally exercisable at general meetings of coffeeheaven, including, for this purpose, to the extent required by the Panel, any voting rights attaching to (or which, if issued, would attach to) coffeeheaven Shares which are unconditionally allotted or issued before the Offer becomes or is declared unconditional as to acceptances whether pursuant to the exercise of any outstanding conversion or subscription rights or otherwise. For the purposes of this condition:

(i) shares which have been unconditionally allotted but not issued before the Offer becomes or is declared unconditional as to acceptances, whether pursuant to the exercise of any outstanding subscription or conversion rights or otherwise, shall be deemed to carry the voting rights they will carry on being properly and validly issued;

(ii) valid acceptances shall be deemed to have been received in respect of the coffeeheaven Shares which are treated for the purposes of section 979 of the Act as having been acquired or contracted to be acquired by Costa by virtue of acceptances of the Offer; and

(iii) the expression "coffeeheaven Shares to which the Offer relates" shall be construed in accordance with Part 28 of the Act;

(B) Costa shall have obtained, for the acquisition of the coffeeheaven Shares and the implementation of the transaction contemplated herein, an unconditional merger control clearance issued by the President of the Polish Office of Competition and Consumer Protection in accordance with the Polish Act of 16 February 2007 on competition and consumer protection (Journal of Laws of 2007, No. 50, item 331) in connection with the contemplated acquisition by Costa of control over coffeeheaven pursuant to the Offer;

(C) no government or governmental, quasi-governmental, supranational, statutory, regulatory, environmental or investigative body, court, trade agency, association, institution or any other body or person whatsoever in any jurisdiction (each a "Third Party") having decided to take, institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference, or enacted, made or proposed any statute, regulation, decision or order, or having taken any other steps which would or might reasonably be expected to:

(i) require, prevent or delay the divestiture, or alter the terms envisaged for any proposed divestiture by any member of the Wider Costa Group or any member of the Wider coffeeheaven Group of all or any portion of their respective businesses, assets or property or impose any material limitation on the ability of any of them to conduct their respective businesses (or any of them) or to own or control any of their respective assets or properties or any part thereof;

(ii) require, prevent or delay a divestiture by any member of the Wider Costa Group of any shares or other securities (or the equivalent) in coffeeheaven;

(iii) impose any limitation on, or result in a delay in, the ability of any member of the Wider Costa Group or the Wider coffeeheaven Group directly or indirectly to acquire or to hold or to exercise effectively any rights of ownership in respect of shares or loans or securities convertible into shares or any other securities (or the equivalent) in any member of the Wider coffeeheaven Group or on the ability of any such member to hold or exercise effectively any rights of ownership in respect of shares or loans or securities convertible into shares or any other securities (or the equivalent) in, or to exercise management control over, any member of the Wider coffeeheaven Group;

(iv) otherwise adversely affect the business, assets, profits or prospects of any member of the Wider Costa Group or of any member of the Wider coffeeheaven Group;

(v) make the Offer, its implementation or the acquisition or proposed acquisition by Costa or any member of the Wider Costa Group of any shares or other securities in, or control or management of, coffeeheaven or any member of the Wider coffeeheaven Group void, illegal, and/or unenforceable under the laws of any jurisdiction, or otherwise, directly or indirectly, restrain, restrict, prohibit, delay or otherwise interfere in any material respect with the same, or impose any material additional conditions or obligations with respect thereto, or otherwise challenge or interfere therewith or require any material amendment to the terms thereof;

(vi) require any member of the Wider Costa Group or the Wider coffeeheaven Group to acquire or to offer to acquire any shares or other securities (or the equivalent) or interest in any member of the Wider coffeeheaven Group or the Wider Costa Group owned beneficially by any third party (other than in the implementation of the Offer);

(vii) impose any limitation (which is material in the context of the Wider coffeeheaven Group taken as a whole) on the ability of any member of the Wider coffeeheaven Group or the Wider Costa Group to conduct, integrate or co-ordinate its business, or any part of it, with the businesses of any other members of the Wider coffeeheaven Group and/or the Wider Costa Group; or

(viii) result in any member of the Wider coffeeheaven Group ceasing to be able to carry on business under any name under which it presently does so which, in any case, is material in the context of the Wider coffeeheaven Group taken as a whole,

and all applicable waiting and other time periods during which any such Third Party could take, institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference or any other step under the laws of any jurisdiction in respect of the Offer or the acquisition or proposed acquisition of any coffeeheaven Shares, or other securities in, or control of, coffeeheaven or any other member of the Wider coffeeheaven Group having expired, lapsed or been terminated;

(D) save as Disclosed, there being no provision of any agreement, arrangement, licence, lease, permit or other instrument to which any member of the Wider coffeeheaven Group is a party or by or to which any such member or any of its assets may be bound, entitled or subject, which as a result of the implementation of the Offer or the proposed acquisition by Costa of any shares or other securities in coffeeheaven or because of a change in the control or management of coffeeheaven or otherwise, would or might reasonably be expected to result in, to an extent which is or would be material in the context of the Wider coffeeheaven Group taken as a whole, any of the following:

(i) any monies borrowed by or any other indebtedness (actual or contingent) of, or grant available to, any such member of the Wider coffeeheaven Group being or becoming repayable or capable of being declared repayable immediately or earlier than their or its stated maturity date or repayment date, or the ability of any such member to borrow monies or incur any indebtedness being withdrawn or inhibited or being capable of becoming or being withdrawn or inhibited;

(ii) any such agreement, arrangement, licence, lease, permit or instrument or the rights, liabilities, obligations or interests of any member of the Wider coffeeheaven Group thereunder being terminated or adversely modified or affected or any obligation or liability arising or any adverse action being taken thereunder;

(iii) any assets or interests of, or any asset the use of which is enjoyed by, any such member of the Wider coffeeheaven Group being or falling to be disposed of or charged or ceasing to be available to such member, or any right arising under which any such asset or interest could be required to be disposed of or charged;

(iv) the creation or enforcement of any mortgage, charge or other security interest over the whole or any part of the business, property or assets of any such member of the Wider coffeeheaven Group or any mortgage, charge or other security interest (whenever created or arising) becoming enforceable;

(v) the rights, liabilities, obligations or interests of any such member of the Wider coffeeheaven Group in, or the business of any such member with, any person, firm or body (or any arrangement or arrangements relating to any such interest or business) being terminated, adversely modified or affected;

(vi) the value of any such member of the Wider coffeeheaven Group or its financial or trading position or prospects being prejudiced or adversely affected;

(vii) any such member of the Wider coffeeheaven Group ceasing to be able to carry on business under any name under which it presently does so; or

(viii) the creation of any liability, actual or contingent, by any such member of the Wider coffeeheaven Group,

and no event having occurred which, under any provision of any agreement, arrangement, licence, lease, permit or other instrument to which any member of the Wider coffeeheaven Group is a party or by or to which any such member or any of its assets may be bound, entitled or subject, could reasonably be expected to result in any of the events or circumstances as are referred to in sub-paragraphs (i) to (viii) of this paragraph (D);

(E) all notifications, filings or applications having been made in connection with the Offer and all statutory or regulatory obligations in any jurisdiction having been complied with in connection with the Offer or the acquisition by any member of the Wider Costa Group of any shares or other securities in, or control of, coffeeheaven and all authorisations, orders, recognitions, grants, consents, licences, confirmations, clearances, permissions and approvals or the proposed acquisition of any shares or other securities in, or control of, coffeeheaven by any member of the Wider Costa Group having been obtained in terms and in a form reasonably satisfactory to Costa from all appropriate Third Parties including, without limitation, persons with whom any member of the Wider coffeeheaven Group has entered into contractual arrangements and all such authorisations, orders, recognitions, grants, consents, licences, confirmations, clearances, permissions and approvals necessary or appropriate to carry on the business of any member of the Wider coffeeheaven Group remaining in full force and effect and all filings necessary for such purpose having been made and there being no notice or intimation of any intention to revoke or not to renew any of the same at the time at which the Offer becomes otherwise unconditional and all statutory or regulatory obligations in any jurisdiction having been complied with;

(F) since 31 March 2009 and save as Disclosed or agreed with Costa, no member of the Wider coffeeheaven Group having:

(i) save as between coffeeheaven and any member of the coffeeheaven Group or between any such members of the coffeeheaven Group or for coffeeheaven Shares issued pursuant to the exercise of options granted under the coffeeheaven Share Schemes prior to the Announcement Date, issued or agreed to issue or authorised or proposed the issue of additional shares of any class, or securities convertible into, or exchangeable for, or rights, warrants or options to subscribe for or acquire, any such shares or convertible capital or transferred or sold or agreed to transfer or sell or proposed the transfer or sale of coffeeheaven Shares out of treasury;

(ii) other than to another member of the coffeeheaven Group, recommended, declared, paid or made or proposed to recommend, declare, pay or make any bonus, dividend or other distribution whether payable in cash or otherwise;

(iii) save for intra-coffeeheaven Group transactions; merged or demerged with any body corporate or acquired or disposed of or transferred, mortgaged or charged or created any security interest over any assets or any right, title or interest in any asset (including shares and trade investments) or authorised or proposed or announced any intention to propose any merger, demerger, acquisition or disposal, transfer, mortgage, charge or security interest, in each case, other than in the ordinary course of business;

(iv) save for intra-coffeeheaven Group transactions, made or authorised or proposed or announced an intention to propose any change in its loan capital;

(v) issued, authorised or proposed the issue of any debentures or save for intra-coffeeheaven Group transactions and save in the ordinary course of business, incurred or increased any indebtedness or become subject to any material contingent liability;

(vi) purchased, redeemed or repaid or announced any proposal to purchase, redeem or repay any of its own shares or other securities or reduced or, save in respect to the matters mentioned in sub-paragraph (i) above, made any other change to any part of its share capital;

(vii) implemented, or authorised, proposed or announced its intention to implement, any reconstruction, amalgamation, scheme, commitment or other transaction or arrangement otherwise than in the ordinary course of business;

(viii) entered into or changed the terms of any contract with any director or senior executive;

(ix) proposed, agreed to provide or modified the terms of any share option scheme, incentive scheme, or, materially altered any other benefit relating to the employment or termination of employment of any employee of the coffeeheaven Group;

(x) entered into or varied or authorised or proposed or announced its intention to enter into or vary, any contract, transaction, arrangement or commitment (whether in respect of capital expenditure or otherwise) which is of a long term, onerous or unusual nature or magnitude or which is or could be restrictive on the businesses of any member of the Wider coffeeheaven Group or the Wider Costa Group or which involves or could involve an obligation of such a nature or magnitude or which is other than in the ordinary course of business;

(xi) (other than in respect of a member which is dormant and was solvent at the relevant time) taken any corporate action or had any legal proceedings started or threatened against it for its winding-up, dissolution or reorganisation or for the appointment of a receiver, administrative receiver, administrator, trustee or similar officer of all or any of its assets or revenues or any analogous proceedings in any jurisdiction or had any such person appointed;

(xii) entered into any contract, transaction or arrangement which would be restrictive on the business of any member of the Wider coffeeheaven Group or the Wider Costa Group other than to a nature and extent which is normal in the context of the business concerned;

(xiii) waived or compromised any claim otherwise than in the ordinary course of business and which is material in the context of the Wider coffeeheaven Group taken as a whole;

(xiv) made any material alteration to its memorandum or articles of association or other incorporation documents which is material in the context of the coffeeheaven Group taken as a whole;

(xv) been unable, or admitted in writing that it is unable, to pay its debts or commenced negotiations with one or more of its creditors with a view to rescheduling or restructuring any of its indebtedness, or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased or threatened to cease carrying on all or a substantial part of its business; or

(xvi) entered into any contract, commitment, arrangement or agreement otherwise than in the ordinary course of business or passed any resolution or made any offer (which remains open for acceptance) with respect to or announced any intention to, or proposed to, effect any of the transactions, matters or events referred to in this condition;

(G) since 31 March 2009 and save as Disclosed:

(i) no adverse change or deterioration having occurred in the business, assets, financial or trading position or profits or prospects of any member of the Wider coffeeheaven Group;

(ii) no litigation, arbitration proceedings, prosecution or other legal proceedings to which any member of the Wider coffeeheaven Group is or would reasonably be expected to become a party (whether as a plaintiff, claimant, defendant or otherwise) and no investigation or enquiry by or complaint or reference to any Third Party against or in respect of any member of the Wider coffeeheaven Group having been instituted, announced or threatened by or against or remaining outstanding in respect of any member of the Wider coffeeheaven Group;

(iii) no contingent or other liability having arisen or become apparent to Costa which would be likely adversely to affect any member of the Wider coffeeheaven Group; and

(iv) no steps having been taken which would be likely to result in the withdrawal, cancellation, termination or modification of any licence or other authorisation held by any member of the Wider coffeeheaven Group which is necessary for the proper carrying on of its business,

in each case, which is material in the context of the Wider coffeeheaven Group taken as a whole;

(H) since 31 March 2009 and save as Disclosed, Costa not having discovered:

(i) that any financial, business or other information concerning the Wider coffeeheaven Group as contained in the information publicly disclosed at any time by or on behalf of any member of the Wider coffeeheaven Group is misleading, contains a misrepresentation of fact or omits to state a fact necessary to make that information not misleading;

(ii) that any partnership or any company or other entity in which any member of the Wider coffeeheaven Group has a significant economic interest and which is not a subsidiary undertaking of the coffeeheaven is subject to any liability (contingent or otherwise) which is not disclosed in the annual report and accounts of coffeeheaven for the year ended 31 March 2009 and which is material in the context of the Wider coffeeheaven Group taken as a whole; or

(iii) any information which affects the import of any information disclosed at any time by or on behalf of any member of the Wider coffeeheaven Group and which is material in the context of the Wider coffeeheaven Group taken as a whole; and

(I) Costa not having discovered that, save as Disclosed:

(i) any past or present member of the Wider coffeeheaven Group has failed to comply with any and/or all applicable legislation or regulation of any jurisdiction with regard to the disposal, spillage, release, discharge, leak or emission of any waste or hazardous substance or any substance likely to impair the environment or harm human health or animal health or otherwise relating to environmental matters, or that there has otherwise been any such disposal, spillage, release, discharge, leak or emission (whether or not the same constituted a non-compliance by any person with any such legislation or regulations, and wherever the same may have taken place) any of which disposal, spillage, release, discharge, leak or emission would be likely to give rise to any liability (actual or contingent) on the part of any member of the Wider coffeeheaven Group and which is material in the context of the Wider coffeeheaven Group taken as a whole;

(ii) there is, or is likely to be, for that or any other reason whatsoever, any liability (actual or contingent) of any past or present member of the Wider coffeeheaven Group to make good, repair, reinstate or clean up any property or any controlled waters now or previously owned, occupied, operated or made use of or controlled by any such past or present member of the Wider coffeeheaven Group, under any environmental legislation, regulation, notice, circular or order of any government, governmental, quasi-governmental, state or local government, supranational, statutory or other regulatory body, agency, court, association or any other person or body in any jurisdiction and which is material in the context of the Wider coffeeheaven Group taken as a whole; or

(iii) that circumstances exist whereby a person or class of person would reasonably be likely to have a claim in respect of any supply, product or process of manufacture or materials used therein now or previously manufactured, sold or carried out by any past or present member of the Wider coffeeheaven Group and which claim is material in the context of the Wider coffeeheaven Group taken as a whole.

2. Further terms and conditions of the Offer

(A) Costa reserves the right to waive in whole or in part all or any of the conditions contained in paragraphs 1(B) to 1(I) inclusive.

(B) The conditions contained in paragraphs 1(B) to 1(I) inclusive must be satisfied as at, or waived (where possible) on or before, midnight on the twenty-first day after the later of the First Closing Date and the date on which the condition in paragraph 1(A) is fulfilled (or, in each case such later date as the Panel may agree).

(C) Costa shall be under no obligation to waive or determine to be or treat as fulfilled, any of conditions 1(B) to 1(I) inclusive by a date earlier than the date specified above for the fulfilment thereof, notwithstanding that the other conditions of the Offer may at such earlier date have been waived or fulfilled, and that there are at such earlier date no circumstances indicating that any of such conditions may not be capable of fulfilment.

(D) If Costa is required by the Panel to make an offer for coffeeheaven Shares under the provisions of Rule 9 of the City Code, Costa may make such alterations to the terms and conditions of the Offer as are necessary to comply with the provisions of that Rule.

(E) The Offer will comply with the applicable rules and regulations of the City Code, will be governed by English law and will be subject to the jurisdiction of the courts of England. In addition, it will be subject to the terms and conditions as set out in this announcement and the Form of Acceptance.

(F) The Offer will lapse if the Offer is referred to the UK Competition Commission before the later of 1.00 p.m. (London time) on the First Closing Date and the date on which the Offer becomes or is declared unconditional as to acceptances. If the Offer so lapses, it will cease to be capable of further acceptance and coffeeheaven Shareholders accepting the Offer and Costa will cease to be bound by any Form of Acceptance and/or Electronic Acceptance submitted before the time when the Offer lapses.

(G) Under Rule 13.4(a) of the Code, an offeror should not invoke any condition or pre-condition of an offer so as to cause the offer not to proceed, to lapse or to be withdrawn unless the circumstances which give rise to the right to invoke the condition or pre-condition are of material significance to the offeror in the context of the offer. The acceptance condition in paragraph 1(A) is not subject to Rule 13.4(a).

(H) The Offer will not be made, directly or indirectly, in or into, or by use of the mails of, or by any means or instrumentality (including, without limitation, facsimile transmission, telex, telephone or e-mail) of interstate or foreign commerce of, or of any facility of a national securities exchange of, Canada, Japan or Australia or any other Restricted Jurisdiction and the Offer will not be capable of acceptance by any such use, means, instrumentality or facility or from within Canada, Japan or Australia or any other Restricted Jurisdiction.

(I) The coffeeheaven Shares will be acquired pursuant to the Offer fully paid up and free from all liens, equitable interests, charges, encumbrances, rights of pre-emption and any other third party rights or interests whatsoever and together with all rights existing as at 15 December 2009 or thereafter attaching thereto, including the right to receive and retain, in full, all dividends and other distributions (if any) declared, made or paid or any other return of capital (whether by way of reduction of share capital or share premium account or otherwise) made on or after the Announcement Date. If any dividend or other distribution is declared, paid or made on or after the Announcement Date, Costa reserves the right to reduce the price of the Offer by the amount of such dividend or distribution (subject to the Panel's consent).

(J) Unless otherwise specified, all references to time are to London time.

APPENDIX 2

Bases and Sources

1. Historical share prices are sourced from the daily official list of the London Stock Exchange and represent closing middle market prices for coffeeheaven Shares on the relevant date.

2. The value attributed to the entire existing issued and to be issued share capital of coffeeheaven is based upon the 133,434,623 coffeeheaven Shares in issue on the date of this announcement and the dilutive effect of the "in the money" options in respect of 16,427,359 coffeeheaven Shares outstanding under the coffeeheaven Share Schemes as at 11 December 2009, the latest practicable date prior to the Announcement Date and which will become exercisable to the extent not already exercisable as a consequence of the Offer (assuming full vesting of performance related awards).

3. Unless otherwise stated, the financial information concerning the Whitbread Group and Costa has been extracted from the interim results of the Whitbread Group for the six months ended 27 August 2009 and from Whitbread's and Costa's internal records.

4. Unless otherwise stated, the financial information concerning coffeeheaven Group has been extracted from the annual reports and accounts of coffeeheaven Group for the financial year ended 31 March 2009, from the announcement of its interim results for the six months ended 30 September 2009 and from coffeeheaven's internal records.

5. References to a percentage of coffeeheaven's existing issued share capital are based on the number of coffeeheaven Shares in issue on the date of this announcement as set out at paragraph 2 of this Appendix 2.

6. References to a percentage of coffeeheaven's existing issued and to be issued share capital are based on the number of coffeeheaven Shares in issue on the date of this announcement as set out at paragraph 2 of this Appendix 2 and the dilutive effect of the "in the money" options in respect of 16,427,359 coffeeheaven Shares outstanding under the coffeeheaven Share Schemes as at 11 December 2009, the latest practicable date prior to the Announcement Date and which will become exercisable to the extent not already exercisable as a consequence of the Offer (assuming full vesting of performance related awards).

7. The premium calculation to the price per coffeeheaven Share with regard to the last Business Day prior to the commencement of the Offer Period has been calculated by reference to the Closing Price of 19.25 pence per coffeeheaven Share on 11 June 2009, being the last Business Day prior to the commencement of the Offer Period.

8. The premium calculation to the price per coffeeheaven Share with regard to the lowest Closing Price at which the coffeeheaven shares traded during 2009 has been calculated by reference to the Closing Price of 10.50 pence per coffeeheaven Share on 17 March 2009.

9. The premium calculation to the price per coffeeheaven Share with regard to the last Business Day prior to the announcement on 11 December 2009 that coffeeheaven was in advanced discussions with Whitbread that may lead to an offer being made for the coffeeheaven Shares at a price of 24 pence per coffeeheaven Share has been calculated by reference to the Closing Price of 19.75 pence per coffeeheaven Share on 10 December 2009.

10. The premium calculation to the price per coffeeheaven Share with regard to the last Business Day prior to this announcement has been calculated by reference to the Closing Price of 22.25 pence per coffeeheaven Share on 14 December 2009, being the last Business Day prior to this announcement.

APPENDIX 3

DETAILS OF IRREVOCABLE UNDERTAKINGS

1. The following coffeeheaven Directors have given irrevocable undertakings to accept the Offer:

Director	Number of existing issued coffeeheaven Shares to which the undertaking relates	Percentage of existing issued share capital to which the undertaking relates	Total number of existing issued and to be issued coffeeheaven Shares to which the undertaking relates(1)	Percentage of existing issued and to be issued share capital to which the undertaking relates(1)
Richard Worthington	1,145,818	0.86%	7,335,818	4.90%
William Currie	15,538,920	11.65%	15,538,920	10.37%
Robert Morrish	126,734	0.09%	796,734	0.53%
Total	16,811,472	12.60%	23,671,472	15.80%

(1) Including shares that may be issued to, or acquired by such person, pursuant to the exercise of options under the coffeeheaven Share Schemes.

The irrevocable undertakings referred to above will cease to be binding in the event that (a) the Offer Document is not posted within 28 days of this announcement or (b) if the Offer lapses or is withdrawn (unless the Offeror announces, with the consent of the Panel, a firm intention to switch to a scheme of arrangement) or (c) if a scheme of arrangement does not become effective or otherwise lapses or is withdrawn, respectively (if the Offeror, with the consent of the Panel, has switched to a scheme of arrangement).

2. The following coffeeheaven Shareholders have given irrevocable undertakings to accept the Offer:

Shareholder	Number of existing issued coffeeheaven Shares to which the undertaking relates	Percentage of existing issued and to be issued share capital to which the undertaking relates
Artemis Institutional UK Growth Fund	1,356,121	0.90%
Ciaran Caulfield	3,420,000	2.28%
Total	4,776,121	3.19%

The irrevocable undertakings referred to above will cease to be binding in the event that (a) the Offer Document is not posted within 28 days of this announcement or (b) if a third party announces a firm intention to make an offer under the City Code for the entire issued and to be issued ordinary share capital of coffeeheaven at a cash price per coffeeheaven Share exceeding the Offer Price or (c), in the case of Ciaran Caulfield's irrevocable undertaking only, if the Offer lapses or is withdrawn (unless the Offeror announces, with the consent of the Panel, a firm intention to switch to a scheme of arrangement), or (d), in the case of Ciaran Caulfield's irrevocable undertaking only, if a scheme of arrangement does not become effective or otherwise lapses or is withdrawn, respectively (if the Offeror, with the consent of the Panel, has switched to a scheme of arrangement).

APPENDIX 4

Definitions

The following definitions apply throughout this announcement unless the context requires otherwise:

"2006 Act"	the Companies Act 2006, as amended;
"Acquisition"	the acquisition or proposed acquisition by Costa of coffeeheaven Shares pursuant to the Offer, details of which are set out in this announcement and will be set out in the Offer Document;
"AIM"	the AIM market operated by the London Stock Exchange;
"AIM Rules"	the rules issued by the London Stock Exchange entitled "AIM Rules For Companies" (as amended);
"Akur Partners"	Akur Partners LLP, financial adviser to coffeeheaven;
"Announcement Date"	15 December 2009;
"Australia"	the Commonwealth of Australia, its states, territories and possessions;
"Business Day"	a day (other than Saturday or Sunday and UK public bank holidays) on which banks are generally open for business in London;
"Canada"	Canada, its provinces and territories and all areas subject to its jurisdiction and any political sub-divisions thereof;
"certificated" or "in certificated form"	the description of a share or other security which is not in uncertificated form (that is, not held in CREST);
"Closing Price"	the closing middle market price of a coffeeheaven Share as derived from the daily official list of the London Stock Exchange;
"Code" or "City Code"	the City Code on Takeovers and Mergers;
"coffeeheaven"	coffeeheaven international plc, a public company incorporated under the laws of England and Wales with company number 4279841;
"coffeeheaven Directors" or "Board of coffeeheaven"	the directors of coffeeheaven at the Announcement Date;
"coffeeheaven Group"	coffeeheaven and its subsidiaries and associated undertakings and, where the context permits, each of them;
"coffeeheaven Share Schemes"	coffeeheaven's share-based incentive arrangements, including the 2001 coffeeheaven international plc Employee Share Option Scheme, the executive performance based incentive options, the standalone option arrangements entered into by coffeeheaven and the coffeeheaven international plc Share Incentive Plan operated in connection with the coffeeheaven international plc Employee Share Ownership Trust;
"coffeeheaven Shareholder" or "coffeeheaven Shareholders"	a holder of a coffeeheaven Share and "Shareholder" and "Shareholders" shall be construed accordingly;
"coffeeheaven Shares"	the existing unconditionally allotted or issued and fully paid ordinary shares of 1 pence each in the capital of coffeeheaven and any further such shares which are unconditionally allotted or issued and fully paid on or before the date on which the Offer closes or, subject to the provisions of the Code, such earlier date or dates as Costa may determine, including without limitation any such shares unconditionally allotted or issued upon the exercise of options granted under the coffeeheaven Share Schemes;
"Conditions"	the conditions to the implementation of the Offer set out in Appendix 1 to this announcement;
"Costa"	Costa Limited, a private company incorporated under the laws of England with company number 1270695 and a wholly owned subsidiary of Whitbread;
"Costa Directors"	the directors of Costa at the Announcement Date;
"Costa Group"	Costa, its holding companies, subsidiaries and associated undertakings and, where the context permits, each of them;
"Deutsche Bank"	Deutsche Bank AG (London Branch), financial adviser to Costa and Whitbread and corporate broker to Whitbread;
"Disclosed"	Disclosed to Whitbread and Costa in any of the following manners: (i) by inclusion in the annual report and accounts of coffeeheaven Group for the financial year ended 31 March 2009; (ii) by delivery of an announcement by or on behalf of coffeeheaven to a Regulatory Information Service; or (iii) by disclosure in writing by or on behalf of coffeeheaven Group to Whitbread and Costa before 8 December 2009 where such disclosure provides sufficient details to identify to Whitbread and Costa the nature and scope of the matter disclosed;
"Enlarged Group"	the Whitbread Group as enlarged by the Acquisition;
"Exchange Act"	US Securities Exchange Act 1934, as amended;
"First Closing Date"	the date which is 21 days after the posting of the Offer Document;
"Form of Acceptance"	the form of acceptance and authority for use in connection with the Offer and the Offer Document, respectively;
"FSA"	Financial Services Authority;
"holder"	a registered holder and includes any person entitled by transmission;
"Japan"	Japan, its cities, prefectures, territories and possessions;
"London Stock Exchange"	London Stock Exchange plc;
"Offer"	the recommended cash offer to be made by Costa to acquire all of the existing issued and to be issued share capital of coffeeheaven on the terms and subject to the conditions to be set out in the Offer Document and, in the case of Shareholders holding coffeeheaven Shares in certificated form, in the Form of Acceptance, including, where the context permits or requires, any subsequent revision, variation, extension or renewal of thereof;
"Offer Document"	the offer document to be sent to coffeeheaven Shareholders containing the formal Offer;
"Offer Period"	the period commencing on 12 June 2009 and ending on the latest of (a) 1.00 p.m. (London time) on the First Closing Date; (b) the time and date on which the Offer becomes or is declared unconditional as to acceptances; and (c) the time and date on which the offer lapses or is withdrawn;
"Offer Price"	24 pence in cash per coffeeheaven Share;
"Opera Public Relations"	Opera Public Relations, public relations adviser to coffeeheaven;
"Overseas Shareholders"	coffeeheaven Shareholders (or nominees of, or custodians or trustees for coffeeheaven Shareholders) who are resident in or are nationals or citizens of jurisdictions outside of the United Kingdom and the United States;
"Panel"	The Panel on Takeovers and Mergers;
"Regulations"	the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755), as amended from time to time;
"Regulatory Information Service" or "Regulatory News Service"	any of the services set out in Appendix 3 to the Listing Rules or (as the case may be) a service approved by the London Stock Exchange for the distribution to the public of AIM announcements and included within the list maintained on the London Stock Exchange's website, www.londonstockexchange.com;
"Restricted Jurisdiction(s)"	Canada, Australia and Japan and any jurisdiction in relation to which the extension or acceptance of the Offer to such jurisdiction would violate the laws of such jurisdiction, or where local laws or regulation may result in a significant risk of civil, regulatory or criminal liability if information on the Offer is sent or made available to coffeeheaven Shareholders in that jurisdiction;
"SEC"	US Securities and Exchange Commission;
"Shore Capital"	Shore Capital & Corporate Limited, financial adviser to coffeeheaven;
"Significant Interest"	a direct or indirect interest of 20 per cent. or more of the total voting rights conferred by the equity capital of an undertaking;
"subsidiary", "subsidiary undertaking", "associated undertaking", "undertaking" and "holding company"	have the meanings given to them in the 2006 Act;
"Tulchan"	Tulchan Communications, public relations adviser to Whitbread;
"UK" or "United Kingdom"	the United Kingdom of Great Britain and Northern Ireland;
"uncertificated" or in "uncertificated form"	recorded on the relevant register of the share or security concerned as being held in uncertificated form in CREST and title to which, by virtue of the Regulations, may be transferred by means of CREST;
"United States" or "US"	the United States of America and all its possessions and territories;
"Whitbread"	Whitbread PLC, a public company incorporated under the laws of England and Wales with company number 4120344;
"Whitbread Directors"	the directors of Whitbread at the Announcement Date;
"Whitbread Group"	Whitbread and its subsidiaries and associated undertakings and where the context permits, each of them;
"Wider coffeeheaven Group"	coffeeheaven, its subsidiaries, associated undertakings and any other undertaking in which coffeeheaven and/or such undertakings (aggregating their interest) have a Significant Interest; and
"Wider Costa Group"	Costa, its subsidiaries, associated undertakings and any other undertaking in which Costa and/or such undertakings (aggregating their interest) have a Significant Interest.

This information is provided by RNS

The company news service from the London Stock Exchange

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