Costa Coffee owner Whitbread has announced it will split the coffee chain from the rest of its business, saying it will soon be able to thrive as an independent company.
Whitbread, which also owns hotel chain Premier Inn, said Costa will be able to create value by capitalising on significant structural growth opportunities in the UK and internationally.
The decision has been made after two activist investors increased pressure to secure greater value from their holdings.
Whitbread said the demerger will be pursued “as fast as practical and appropriate to optimise value for shareholders and is expected to be completed within 24 months”.
It added that the timeframe will allow both Premier Inn and Costa to maintain momentum, complete transformation and infrastructure objectives such as increasing the Costa business abroad. Last year, Whitbread acquired 49% of Costa’s south China joint venture from its partner in a deal worth £35 million.
Whitbread chief executive Alison Brittain said: “Over the last two years, Whitbread has made tremendous progress in innovation and growth in our core UK businesses and we have recently delivered a step-change in international development through two significant acquisitions in China and Germany.
“We have considerable momentum in the delivery of a complex multi-year transformation programme which will improve our core operational capability, redevelop our technology platform and deliver significant levels of efficiency.
“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.”
Whitbread chairman Adam Crozier added: “The Whitbread board has conducted regular and rigorous reviews of its strategy and structure for a number of years. For some time, the board has been of the view that at the right time Premier Inn and Costa should be independent companies.
“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 our intention now provides clarity of our strategic direction to our shareholders, team members and other stakeholders.”
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