Whitbread to spin off Costa chain as a separate firm

Whitbread to spin off Costa chain as a separate firm

Whitbread is to split off Costa, the UK’s biggest coffee chain, as a separate firm, after activist pressure.

The demerger will be “pursued as fast as practical and appropriate” to optimise value for shareholders.

“We will ensure prior to separation each business is sufficiently developed and well-positioned,” said Whitbread chairman Adam Crozier.

The activist investors, Elliott Advisors and Sachem Head, together control about 10% of shares.

The spun-off firm will be listed as a separate business.

‘Best interests’

Whitbread said Costa Coffee was the clear UK market leader and second largest globally, and had attractive long-term international opportunities.

However, for now Whitbread will remain the owner and operator of Premier Inn, which has also been in the spotlight as another possible asset ripe for spinning off.

Whitbread chief executive Alison Brittain said: “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.

“The management team and I are excited that the strategy we are executing will give us the opportunity to create two high-quality independent businesses that will create long-term value for our stakeholders.”

She told BBC Radio 4’s Today programme that the sale was taking place because the time was right, not because of activist shareholder pressure.

And she said Whitbread had been building up the international strength of both Premier Inn – by adding a German hotel chain – and Costa, by buying out one of its Chinese joint venture partners.

Ms Brittain said Costa hoped to triple its presence in China, where it is second to Starbucks.

Source: BBC News

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