Whitbread sells brewing for £400m
Whitbread has an extra £400m in the bank after today completing the sale of its brewing business, which includes the Stella Artois, Heineken and Boddington brands, to Interbrew of Belgium.
A Whitbread spokesman said it would be "precipitous" to state how the company intended to spend this cash, but pointed out that the group intends to focus on its restaurant, branded pubs, health and fitness and hotel businesses.
Investment has been earmarked for sectors where Whitbread holds the market-leading position, or where demand outstrips supply. This would include its Travel Inn budget hotel chain, David Lloyd health and fitness clubs and Costa Coffee restaurant chain.
Buying the De Vere business, which combines hotels with health clubs, would seem the most logical fit, commented John Spicer, brewery analyst at USB Warburg. Speculation has linked Whitbread to De Vere for at least a year.
Paul Hickman, analyst at Peel Hunt, suspected health clubs would be high on Whitbread's spend list.
Costa Coffee, the only Whitbread restaurant chain to have enjoyed significant investment last year, could be expanded by acquiring less profitable rivals such as Coffee Republic or Madisons, but Hickman argued there would be a large overlap of sites in London.
Analysts expect Whitbread to concentrate on building up its existing business, rather than branching out into newer areas such as juice bars or Internet cafes.
The company could receive a further £50m from Interbrew, depending on how it develops the brewing business.
by Angela Frewin angela.frewin@rbi.co.uk
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