Whitbread puts pub division up for sale

Whitbread is set to sell off its 3,000-strong pubs and bars division in order to focus on its Marriott and Travel Inn hotels, Brewers Fayre and Beefeater restaurants and David Lloyd leisure clubs.

The company believes these sectors have greater growth potential.

The strategy was unveiled to the City last week by chairman Sir John Banham and chief executive David Thomas.

In a statement, Whitbread said: "The board considers full value for pubs and bars can now be realised for Whitbread shareholders under a different ownership structure... This process will result in a substantial return of value to shareholders, and in a more streamlined future Whitbread."

Banham told City analysts: "We're not going to be rushed into a sale. We are going to be very flexible in the way we approach the process. This is not a fire sale; this is an excellent business earning well over £200m a year." Whitbread had already received several approaches from potential buyers, he said.

The division could be sold as a whole, or in parts.

There was no word on whether any of Whitbread's other restaurant chains, such as Café Rouge, would be sold off. A further announcement is due on Tuesday (31 October).

Thomas said all the chains would have to deliver 10% compound growth in annual profits.

He added: "I want them all to succeed but I won't hesitate to act if they don't."

The David Lloyd Leisure name will be extended to the 48 health and fitness clubs at Marriott and Swallow hotels.

by David Shrimpton