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Thu 7th Jun 2018 - Whitbread open to selling Costa or Premier Inn, executive pay scheme document reveals
Whitbread open to selling Costa or Premier Inn, executive pay scheme document reveals: Whitbread is open to selling Costa Coffee or Premier Inn, according to a new executive pay scheme circulated to shareholders. The company said in April it planned to demerge Costa into a separately listed company within two years to “provide shareholders with an investment in two distinct, focused and market-leading businesses”. However, a proposed new remuneration policy sent to shareholders and published on Whitbread’s website showed the firm is willing to consider a sale of either Costa or Premier Inn to another company instead. Last month, Propel reported Whitbread, led by chief executive Alison Brittain, would revise its remuneration policy in light of the Costa demerger. The new scheme now includes a so-called performance share plan linked to delivering that goal – but goes one step further. It said executives would be rewarded for separating the divisions “whether that is implemented by way of demerger or by way of the sale to a third party of all or substantially all of one or other of those businesses”. That differs from Whitbread’s April announcement, when the company referred only to a Costa demerger. The company, which has a market value of about £7.7bn, pledged to separate its main businesses after mounting pressure from US activist investors Elliott and Sachem Head. Elliott is Whitbread’s single biggest shareholder with a stake of more than 6%. The hedge fund has already said a Costa demerger should be completed within six months rather than the two-year time-frame eyed by Whitbread. The spin-off plan has spurred speculation Whitbread could attract a bidder for Costa Coffee or Premier Inn. When asked in April during a presentation to analysts of its full-year results, Brittain refused to say if approaches had been received to sell Costa. JAB Holdings, the investment fund of Germany’s billionaire Reimann family, has been buying coffee businesses in recent years and bankers had considered it a possible suitor for Costa. However, JAB acquired Pret A Manger for about £1.5bn last month in a move some bankers think makes it less likely to consider an offer for Costa. Whitbread’s new remuneration policy will be put to an investor vote at a shareholder meeting on Wednesday, 27 June and will require the support of investors owning more than 50% of the company’s shares. A Whitbread spokesman said: “The whole purpose of the proposed scheme, as shareholders will read, is to focus management on delivering the de-merger.   Theoretically, under the scheme, management could be incentivised to reject an offer at a significant premium for either part of the business – hence this caveat in the wording. There is no sale process for either Costa or Premier Inn – demerging into two independent companies remains the strategic objective.”


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