Whitbread to merge with Travelodge?

Whitbread is in talks to merge its budget chain Premier Inn with rival Travelodge, in a deal that would create a company worth around £3b, sources have confirmed.

Travelodge is owned by Dubai International Capital (DIC), the private equity group owned by the Arab Emirate's ruling sheikh.

Premier Inn is already the UK's largest hotel chain and is Whitbread's biggest and best performing business.

It is not clear who would run the joint business as Alan Parker, Whitbread's chief executive, is due to retire in 2010.

Travelodge chief executive Grant Hearn ran Whitbread's Travel Inn business before being poached by DIC to run Travelodge.

Both Whitbread and Travelodge have declined to comment on the merger speculation.

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By Gemma Sharkey

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