STRATEGY

Whitbread is pushing ahead with demerger plans that will see Britain’s biggest coffee chain spun out as a separate business.

The splitting off of Costa will be “pursued as fast as practical and appropriate” to optimise value for shareholders, the group said. The deal is likely to be completed within two years.

Activist investors Elliott Advisors and Sachem Head together control about 10 per cent of Whitbread’s shares and had been pushing for change.

Alison Brittain, chief executive of the leisure giant, which also owns the Premier Inn hotel chain, said: “Given the progress Whitbread is making, we are confident that both Premier Inn and Costa will soon be businesses of sufficient strength, scale and capability to enable them to thrive as independent companies.

“The board, therefore, believes that it is in the best long-term interests of Whitbread’s many stakeholders to separate Premier Inn and Costa, via a demerger of Costa.”

She added that the separation, which will see Costa gain

0 The coffee chain, acquired in 1995, now has more than 2,400 UK outlets

ALISON BRITTAIN, CEO its own listing, will create “long-term value” for stakeholders and allow both businesses to focus on growth in the UK and internationally.

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

The coffee chain has more than 2,400 UK outlets, as well as some 1,400 outlets in 31 overseas markets. Costa Express has more than 8,000 vending machines worldwide.

Alongside the demerger announcement, Whitbread reported annual sales growth of 6.1 per cent to £3.3bn while pre-tax profits rose 6.4 per cent to £548 million.

The annual figures also showed that Costa booked a 1.2 per cent rise in like-for-like sales over the year, ahead of expectations.

Whitbread has a history dating back to 1742 and has over the years owned a bevvy of well-known brands such as TGI Fridays, Pizza Hut and Marriott Hotels. The group, which owns Brewers Fayre,

“The board believes that it is in the best long-term interests of Whitbread’s many stakeholders to separate Premier Inn and Costa.”