By Ben Martin
Britain’s Whitbread is open to selling its Costa coffee chain or Premier Inn hotels and abandoning its original plan to spin-off the coffee business, according to a new executive pay scheme circulated to shareholders.
The Ftse 100 company which has 2,300 outlets in Britain and 107 in Ireland, said in April it planned to demerge Costa into a separately listed company within two years to “provide shareholders with an investment in two distinct, focused, and market-leading businesses”.
A new remuneration policy sent to shareholders this month, and published on Whitbread’s website, shows the firm is willing to consider a sale of either Costa or the hotel chain to another company instead.
Whitbread, led by CEO Alison Brittain, is overhauling its executive pay scheme to account for a new objective of separating its two main divisions.
The scheme now includes a so-called performance share plan linked to delivering that goal.
The company, which has a market value of about £7.7bn (€8.8bn), pledged to separate its main businesses after coming under pressure to do so from US activist investors Elliott and Sachem Head. Its shares were down 1%.
Selling Premier Inn or Costa rather than a demerger, could put Whitbread’s bosses at loggerheads with Elliott, which believes splitting them into two listed entities will allow the stock market to properly value the businesses.
The activist hedge fund has already said a Costa demerger should be completed within six months.
The spin-off plan has spurred speculation Whitbread could attract a bidder for either the coffee chain or hotel division.
JAB Holdings, the investment fund of Germany’s billionaire Reimann family, has been buying up coffee businesses in recent years and bankers had considered it a possible suitor for Costa.
JAB snapped up British sandwich and coffee shop chain Pret A Manger for about £1.5bn last month.