Whitbread planned to list Costa as an independent publicly traded company which would have taken up to two years, but the company was under pressure from investors to turn its focus to its Premier Inn hotel operations.

"In light of Whitbread's progress, we are confident that Premier Inn and Costa will soon become companies of sufficient strength, size and capacity to thrive independently," had said Alison Brittain, CEO, Whitbread.

Also read: Not everyone agrees on the future of Whitbread’s Premier Inn brand

According to Elliott Advisors, once independent, the two companies would have a total market capitalisation of £10 billion (€11.4 billion) compared to £7.7 billion currently (€8.8 billion).

However, Coca-Cola agreed to buy Costa Coffee for 3.9 billion pounds (€4.3 billion).

Whitbread shares surged 17 percent to 4,717 pence in London as the sale gives the U.K. company a quick way out.

The sale will yield a "substantial premium" to the value that would have been created through a spinoff, Whitbread said. The company will return most of the proceeds to its shareholders.

In 1995, Whitbread had bought Costa for 19 million pounds (€21.5 billion).