Whitbread faces S&N in fight for Greenalls

Speculation is growing over Whitbread's next move after pub group Scottish & Newcastle (S&N) confirmed that it is in acquisition talks with Greenalls Group, in which Whitbread is also understood to be interested.

Whitbread is thought to have renewed its interest in Greenalls after having lost out over its bid for Allied Domecq's pub estate to rival Punch Taverns.

Last week S&N stepped in and is expected to make an offer of more than £1b for the group's 769 pubs and 69 Premier Lodges.

Even if a sale is agreed, Greenalls will be left with its 17 De Vere hotels and 10 Village Leisure hotels, which would fit snugly into Whitbread's Marriott chain.

Another potential takeover target for Whitbread is the Swallow Group, which has 38 hotels.

Although chief executive Peter Catesby has long argued that he has no intention of selling the group, he may consider a merger with Greenalls once it has disposed of its pub and lodge division. Catesby was unavailable for comment, but a Greenalls spokeswoman said: "I couldn't confirm or deny it."

Also on Whitbread's shopping list, say industry sources, is City Centre Restaurants (CCR), the group which owns about 300 restaurants including the ailing Deep Pan Pizza chain.

Chief executive James Naylor said that so far there had been no approaches. "We are happy as we are," he said.

Whitbread refused to comment. But analysts believe CCR, which is expected to turn in disappointing interim results this week, could provide an attractive purchase if its share value drops.

by Christina Golding