Whitbread PLC Announces Intention to Demerge Costa

Date: April 2018

Location: Mainly UK, with emerging markets such as Germany

Name: Premier Inn and Costa demerger.

No. of Keys: 65,000 over 750 hotels

Over the last few years Whitbread’s Board say it has rigorously and regularly reviewed its strategy and structure and has for some time been of the view that separating Premier Inn and Costa, at the right time, would enable long-term value to be optimised.

Whitbread is now committed to a demerger of Costa, providing shareholders with investments in two distinct, focused and market-leading businesses.

Demerger of Costa will be pursued as fast as practical and appropriate to optimise value for shareholders.

Whitbread PLC is to remain the owner of Premier Inn, the UK’s largest budget hotel business.

Costa is the UK market leader and second largest globally, coffee shop business.

The demerger of Costa will be pursued as fast as practical and appropriate to optimise value for shareholders and is expected to be completed within 24 months.

THPT Comment: Is this the culmination of Whitbread’s board long-term thought process, or a reaction to share activists Sachem Head and Elliott Advisors forcing their hand?

Meanwhile, said it struck deals for 31 new Premier Inn hotels in the last year (2017), adding a further 4,300 bedrooms to its secured development pipeline.

Outside of London, new sites have been added across the country including in core cities such as Cambridge, Oxford, Edinburgh and Brighton.

Deals have also been signed to bring Premier Inn hotels to Brecon, the Isle of Man and Porthmadog, on the border of Snowdonia National Park, for the first time.

Progress has also been made expanding into new markets, such as the Republic of Ireland, where the business is focusing on establishing Premier Inn in the Irish market over the coming financial year, with Dublin the key location.

Jo Moon, director of acquisitions for Whitbread, said: “From city centres to national parks, we’ve secured a fantastic range of sites across the UK this year in the best locations.

“The pace at which we are doing deals demonstrates how active we are across the country and we plan to build on this momentum, targeting a similar number of Premier Inn and hub by Premier Inn bedrooms in the 2018/19 financial year.

Whitbread’s financial year ran from March 2017 to February 2018. In its preliminary results presentation, the business confirmed it has more than 14,700 Premier Inn and hub by Premier Inn bedrooms in its committed pipeline and expects to achieve its target of 85,000 bedrooms by 2020.

First Seen: Whitbread website