Britain's biggest hotel and coffee shop operator Whitbread it had agreed to acquire self serve coffee bar chain Coffee Nation for £59.5m.
Whitbread, which owns Costa Coffee, said the acquisition would enable it to develop a new brand, Costa Express. It is targeting having 3,000 self serve coffee bars across Britain over the next five years. Coffee Nation already has 900 units.
The group, which also operates the Premier Inn chain, also said total sales grew 12.4 per cent in the 11 weeks to 17 February.
"Our like for like sales are good especially in a challenging economic environment and against tougher comparatives," chief executive Andy Harrison said.
Whitbread, which runs nearly 600 hotels and close to 1,200 coffee shops in Britain, said it anticipated its full year results would be in line with market expectations.
The group has cut room prices at Premier Inn to as little as £29 a night, to woo leisure and business travellers trading down from 4 and 5 star hotels.
Whitbread has been a consistently strong performer throughout the economic downturn because of the value-for-money focus of Premier Inn and Costa Coffee being viewed as affordable luxury by consumers.