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Premier Inn owner Whitbread returns £2.5bn to shareholders

By Henry Saker-Clark, PA City Reporter
The shareholder payout comes after the hospitality group completed the £3.9bn sale of Costa Coffee to Coca-Cola last year.

Premier Inn owner Whitbread said it has completed a programme to return £2.5 billion to shareholders after it sold its Costa Coffee chain to Coca-Cola last year.

Whitbread said £2 billion is being returned to shareholders via a purchase of its own shares at a price of 4,972p per share in the latest phase of the capital return programme.

The shareholder payout comes after the hospitality group completed the £3.9 billion sale of Costa to Coca-Cola last year.

The latest £2 billion phase of the capital return programme from May to July came after the firm’s first phase of the programme, which saw £482 million worth of shares repurchased.

Whitbread said the tender offer would become unconditional on Tuesday morning.

It said the offer was oversubscribed, and the aggregate value of shares exceeded £2 billion.

Whitbread’s shares have been in a rich vein of form over the past 18 months, rising by around 30% over the period after it was buoyed by the sale of its high street coffee shop business.

Proceeds of the deal have been given back to shareholders, as well as being used to pay down debt and boost its pension fund.

Whitbread acquired Costa in 1995 for £19 million from founders Sergio and Bruno Costa when it had only 39 shops.

It grew to have more than 2,400 outlets and embark on overseas expansion before it was snapped up by the US drinks giant.

Last month, the Premier Inn owner reported a sharp drop in UK sales as Brexit uncertainty continues to take its toll on business travel.

The group said like-for-like UK accommodation sales dropped 4.6% in its first quarter of the financial year, while revenue per room – a key measure for hotel firms – tumbled 6.3%.

Shares in the company sank on the share return news, falling by 1.6% to 4,825p in early trading on Monday.