Costa Coffee to spin off from Whitbread

Whitbread is to spin-off its Costa Coffee chain from the rest of the business, which includes Premier Inn hotels, after pressure from activist investors.

The company said the demerger of Costa – the UK’s biggest coffee chain – would be completed within two years, allowing shareholders to invest in “two distinct, focused and market-leading businesses”.

The decision follows pressure from activist investors who have built up stakes in the group over the past year and argued that Whitbread would be best split into its two component parts, Costa and the Premier Inn hotel and restaurant chains – the latter including restaurant brands such as Brewers Fayre and Beefeater.

Alison Brittain, chief executive, said that while the discussion about a potential separation had been “around for years”, the time was now right.

She added: “Given the significant strategic progress that has been made and the momentum in the delivery of the plan, the board is confident that both Premier Inn and Costa will soon be businesses of sufficient strength, scale and capability to enable them to thrive as independent companies.”

Costa will be a separate listed company, while Whitbread will remain the owner of Premier Inn.

More details to follow …