Whitbread reveals plans to demerge Costa brand

Apr 28, 2018

Both businesses will be in a strong position to create value by capitalising on significant structural growth opportunities in the UK and internationally, says the company whose headquarters are in Dunstable.

The demerger of Costa is expected to be completed within 24 months.

Whtibread’s board has been reviewing regularly the company’s strategic direction and structure.

The board has for some time been of the view that separating Premier Inn and Costa at the right time would enhance focus and enable value to be optimised for shareholders over the longer term. Directors believe 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 two-year timeframe will allow both Premier Inn and Costa to complete infrastructure work, develop international strategies and deliver their recently upgraded efficiency programme.

Whitbread chairman Adam Crozier said: “A separation will provide enhanced focus for each business and give shareholders an investment in two high-quality businesses.

"We will ensure that prior to separation each business is sufficiently developed and well-positioned to take advantage of the structural growth opportunities available to them in the UK and internationally.”

Announcing the plan now provides clarity of Whitbread’s strategic direction to shareholders, team members and other stakeholders, he added. 

“The team will now also be focused on ensuring the demerger of Costa is conducted as fast as practical and appropriate to optimise value for Whitbread’s shareholders.

"The board fundamentally believes this is the best course of action to optimise value for shareholders over the longer term and will ensure both Premier Inn and Costa are positioned well to thrive as independent companies.”

Whitbread has made strides in developing its core UK businesses alongside strengthening its international operations through acquisitions in China and Germany. It is also part-way through a long-term transformation programme to improve its operational capability, redevelop its technology and deliver significant levels of efficiency.

Costa will become a listed entity in its own right and will be well positioned to build further on its strong international foundations with growth expected in China and Costa Express. 

Whitbread will remain the owner and operator of Premier Inn, the UK’s most successful hotel business.

Chief executive Alison Brittain said: “We are confident in our plans to deliver further progress in these areas, which will ensure both Premier Inn and Costa are in a strong position to continue their success as separate entities, creating further value for our shareholders and opportunities for our team members. 

“I am excited that at the point of separation, both businesses will be able to take advantage of the structural growth opportunities available to them in the UK and internationally.” 

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