Whitbread (LON:WTB) posted a solid set of financial results with revenues up 2.6% to £1.1 billion and profits increasing 2.9% to £286 million in its first half (H1) of the year. But its interim results were overshadowed by the £3.9 billion sale of Costa to Coca-Cola (NYSE:KO) that was announced in late-August.
Whitbread had initially planned to spin-off Costa after yielding to pressure from two prominent hedge funds that wanted to see the unit separated from the Premier Inn hotel chain. The company was apparently making good process with the demerger, only for Coca-Cola to make an offer to good to turn down, with the beverage company paying a hefty premium to acquire the business.
‘The highlight of the first half was the announcement of our agreement for the sale of Costa to The Coca-Cola Company for £3.9 billion, which received the overwhelming approval of our shareholders in October,’ Whitbread CEO Alison Britton said.
Coca-Cola still requires regulatory approval from EU and Chinese regulators before the deal can be finalised. Once the deal is completed, Whitbread plans to return a significant portion of the net cash proceeds from the sale of to its shareholders, the company said.
Following the sale of Costa, Whitbread will be left with its Premier Inn hotel business, which has operations in the UK, Germany and the Middle East. In H1, the hotel business delivered sales growth of 4.8%, but Whitbread admitted that it had seen ‘weakness in consumer demand over the summer’.
With the prospect of life without Costa, Whitbread has grown its UK network to more than 74,000 rooms, with plans to add a further 13,000 in the pipeline, the company said.
‘We are now looking forward to dedicating our focus to the significant structural growth opportunities available to Premier Inn in the UK and internationally,’ Britton added.