Whitbread reshuffle sparks sell-off talk

Speculation that Whitbread is planning to hive off some of its non-core businesses resurfaced this week in the wake of an internal restructuring.

The hospitality giant's decision to merge its Premier Travel Inn budget hotel group and pub-restaurants into a single business unit sparked rumours that it intends to hive off some or all of its remaining operations.

Expectations of a break-up were further heightened by last week's news that billionaire private investors David and Simon Reubens had built up a minority stake.

Speculation includes a private equity-backed management buyout at Costa Coffee and the sale of Whitbread's franchise stake in Pizza Hut and TGI Friday's back to their respective US owners.

Virgin Group, Duke Street Capital and Clerkenwell Ventures have also been named as potential buyers of the David Lloyd Leisure chain of health clubs.

Whitbread refused to comment on the rumours but said it was committed to all the brands it operates and had no current plans to sell any of them.

A spokeswoman said the merger of the budget hotel and pub-restaurant divisions was a cost-saving measure because more than half the businesses were co-located and run by the same general manager.

But with only budget hotels delivering growth above the cost of capital returns, City analysts continue to dispute the future of the company. Panmure Gordon recently suggested that Whitbread should consider selling its pub-restaurants for up to £1b, possibly to Mitchells & Butlers.

It also proposed the sale-and-manage-back of David Lloyd Leisure and the sale of all or part of the high-street restaurant estate.
But analyst Stuart Price suggested that the prospect of any significant disposals looks increasingly remote. "It now looks as though Whitbread is drawing the businesses together rather than putting them into disposable chunks," he said.

By Angela Frewin

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