Whitbread finally agrees to break up and sell the coffee

Whitbread has bowed to pressure from shareholders by announcing its intention to demerge Costa Coffee yesterday. However, according to The Times, the activist shareholders pushing for the split were understood yesterday to be extremely disappointed with the proposed two-year timeframe. The FTSE 100 leisure operator said that splitting the coffee shop chain from its Premier Inn hotel division would take place “as fast as practical and appropriate” and then insisted that it would need up to 24 months to complete the process. That was not what Sachem Head and Elliott Advisors, which hold stakes of 3.4% and more than 6%, respectively, had been hoping for. Elliott promptly hit back with the assertion that a demerger “should be achieved within six months”. Chief executive Alison Brittain refuted the suggestion that the idea and timing of the split had been forced upon her, just when the announcement was made according to the Telegraph. She also said a demerger, rather than a sale, “represented the simplest and quickest way to achieve the most appropriate valuation for both businesses”. The Independent reported that shares in Whitbread rose at the open after the company confirmed that it would demerge the high street cafe business and retain control of hotel chain Premier Inn, following weeks of speculation. Click here for the full Times article (£) Click here for the full Telegraph article Click here for the full Independent article Click here for the full Guardian article Click here for the full FT article