Whitbread bows to investor demand for Costa split within two years

Whitbread (Frankfurt: WHF4.F - news) is to spin-off its Costa coffee empire from its hotel and other interests following pressure from shareholders.

The company said Costa would be listed as a separate business within two years under its plans which were announced after so-called activist investors clamoured for greater value.

It emerged earlier this month that Elliott Advisors had become Whitbread's largest shareholder and was seeking the so-called demerger on the grounds it could potentially value separated firms at a combined £10bn as opposed to the current £7.7bn within the Whitbread stable.

It was supported by at least one other major shareholder.

Whitbread said it would remain the owner of its other current brands, led by the Premier Inn hotel chain.

Chief (Taiwan OTC: 3345.TWO - news) 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."

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