BBC News Online: Business

Whitbread in pubs shake-up

In a statement, Whitbread said it would "unlock the value" in its 3,000 pubs.

This was widely interpreted as meaning a sell-off was on the way.

Whitbread shares climbed 41 pence, or 9.5%, in morning trade to reach 472-1/2p by 1100 GMT.

However, they remain sunk well below their year high of 649-1/2p.

The year's low was 412p.

Full advantage

In its statement, the company said it was forming a unit called "Future Whitbread" which would concentrate on its Marriott and Travel Inn hotels, its Brewers Fayre and Beefeater restaurants and its David Lloyd Leisure leisure business.

Chairman Sir John Banham said: "The restructuring creates the opportunity and the momentum to manage Whitbread's brands and property assets more aggressively and to take full advantage of Whitbread's leading positions in growth segments of the UK leisure market."

Chief executive David Thomas said the list of potential buyers was "well into double figures" and included private equity firms as well as trade buyers.

MBO "not on the cards"

The pubs business management was "very highly motivated" but a management buy-out was "not on the cards", he said.

About 75% of the net proceeds of any sale would be returned to shareholders, Whitbread said.

Until then, Whitbread may also seek to benefit its shareholders by buying back shares.

Mr Thomas declined to specify what price Whitbread would seek for its pubs business.

"We aim to get the best price for what is a great business," he said.

Analysts estimated the pubs' value at about £1.4bn-1.6bn.

Whitbread is due to publish results for the six months to 2 September on 31 October.

Profit before one-off items and tax is expected to be not less than £181m, the company said.

The pubs and bars division generated earnings before interest, tax, depreciation and amortisation of about £104m on sales up 3.3% at £341m.