Costa and Premier Inn in spotlight

By Eamon Quinn

Whitbread boss Alison Brittain believes a split between the group’s Premier Inn hotels and Costa coffee shop businesses is inevitable, as the €8.84bn Ftse-100 company prepares to publish 2017 results on Wednesday.

Last week, hedge fund Elliott Advisors became the second activist investor to call for Whitbread to split its Premier Inn hotel chain from the Costa Coffee businesses, pushing shares in the company higher.

The Sunday Times reported that chief executive, Ms Brittain, is expected to set out her position on Wednesday.

The report said unnamed sources believed she was not “philosophically opposed” to a split, and regarded such a move as a case of “when, not if”. Whitbread declined to comment on the article.

In January, the group said it had an open mind about its future structure.

Whitbread has, in recent years, sold off its brewing business, and some pubs, to focus mainly on Costa, as well as Premier Inn hotels, the Beefeater restaurant brand, and the Brewers Fayre pub restaurant chain.

Elliott, part of US investor Paul Singer’s hedge fund firm, believes splitting Whitbread into two listed entities would allow the market to value it properly, a source told Reuters last week.

Fellow activist, Sachem Head, has also been pushing for a break-up of the £7.76bn (€8.84bn) company.

In January, the Irish Examiner reported that Whitbread would likely bypass Ireland, as it pursued more growth for its Costa chain, even though consumer spending is powering ahead here.

Amid the retail slowdown in the UK, it plans to open 100 more stores, where it has 2,300 outlets.

Outside the UK, it has 600 stores, including 400 in China and 107 in the Republic. However, of its international operations, it is likely to focus on China, because of the potential for growth in the vast country.

The Whitbread chief had said, in January, that the board was “fully open” to reviewing its structure.

A leading analyst at the time said that the most likely outcome was that Whitbread would sell off the Costa chain.

Additional reporting Reuters

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