Wake up and smell the Costa demerger

0 Activist investors Elliott Advisors and Sachem Head are both pushing for spinoff Whitbread boss Alison Brittain is set to say she has no major objection to a break-up of the Costa Coffee chain from its Premium Inn hotels at the full year results this week, City sources say.

But Brittain will avoid setting a timetable for the demerger of the 2,400 outlet Costa business, which she has been expanding in China and driving into train stations and airports.

Activist investor Elliott Advisors, which spent years pushing for change at Dundee- based Alliance Trust, now owns 6 per cent of Whitbread and is understood to favour a break-up to release value.

Sachem Head, another activist investor, which has built a 3.4 per cent stake, is also thought to favour a split of Costa and Premium Inn.

Costa is thought to be worth between £2 billion and £3bn while Premier Inn is valued at up to £8bn.

On the latest annual financial results on Wednesday, the City consensus is for a profit of £585 million, up from £565m.