Whitbread said it would pay 35 million pounds for the stake.

Costa currently owns 51 percent of the joint venture which operates 252 stores in southern China, along with 93 stores in Shanghai.

The business will continue to be consolidated in Costa's and Whitbread's financial accounts, the company said.

The deal comes at a time when Whitbread, which also runs Premier Inn hotels, is battling a tough retail environment in its home market of Britain.

(Reporting by Rahul B in Bengaluru; Editing by Jason Neely and Mark Potter)