Dominic Walsh looks at what the future is likely to hold for Whitbread following the sale of Costa to Coca-Cola. He asks whether Pure is being lined up to repeat Costa’s success story and where the deal leaves Premier Inn, as well as speculating on whether this marks the beginning of the end for Whitbread as a corporate entity, and how many tears would be shed over its demise.

Will Alison Brittain go down in history as the woman who consigned Whitbread to the history books? She may have brought in an undeniably premium price for Costa Coffee, but the big question is: in doing so has she left Premier Inn vulnerable to a bid from a rival hotel operator or a financial player?

In the aftermath of the announcement of Costa’s £3.9bn sale to Coca-Cola, Ms Brittain was adamant that she would continue to run the scaled-down Whitbread for the next few years, batting away suggestions that, once the deal goes through next year, she should step aside and hand the baton to a seasoned hotelier. She was, she said, “going nowhere”.

She insisted that, having presided over Whitbread’s 275th anniversary celebrations this time last year, she fully intended to be at the helm for the 277th, 278th anniversaries and beyond until handing the baton to a successor.

You can’t blame her for maintaining that stance, but is it realistic to believe that a quoted hotel chain that dominates the UK market but has no global aspirations can retain its independence over the long term? What wouldn’t an Accor or a Marriott pay to lock up the UK market, perhaps in tandem with a property investor like Blackstone ready to snap up Premier Inn’s estimated £5bn of assets?

Ms Brittain insisted that Whitbread investors liked Premier Inn’s business model of both owning and operating hotels, which contrasts with the asset-light formula employed by most global hoteliers. That may be the case but if a big-pocketed suitor – a hotel equivalent of Coca-Cola – came knocking with a similarly premium offer, it would surely prove hard to resist.

Not everybody thinks that, though. Richard Baker, the former Whitbread chairman, told me he thought the original Costa demerger plan would have been more likely to have left both vulnerable to bids as there would have been a risk that splitting into two separately listed companies might not have created much upside in value.

Conversely, with a net £3.8bn after costs in her back pocket, Ms Brittain’s hand would be considerably strengthened and she would now have the opportunity to “do more things with Premier Inn”, possibly enabling it to look at acquisitions in sectors such as serviced apartments and student accommodation. In fact, given its balance sheet, Whitbread would be comfortably able to swallow a Staycity or a Generator, both of which have strong international aspirations, yet still return well over £2bn to shareholders, plug its £350m pension deficit and cut its £800m of bank debt.

While Ms Brittain has not ruled out a move into a complementary sector to hotels, she currently seems more fixated on exploiting the Premier Inn opportunity in Germany. The estimated £250m acquisition in February of 13 trading hotels and half a dozen pipeline sites from Foremost Hospitality Group, a privately owned Holiday Inn Express franchisee, was a decent deal and she has hinted at further corporate action in Germany, but such a move would not make Whitbread any less attractive to putative suitors.

My own view, for what it’s worth, is that if the former banker really wants to preserve Whitbread for posterity, she should crack on with acquiring one or more businesses in complementary sectors while continuing to expand Premier Inn in the UK and Germany and returning cash to shareholders.

Mind you, who’s to say that Whitbread, as a corporate entity, is worth saving? After all, it is almost 20 years since Whitbread got out of brewing and it has got through a veritable jumble sale of other disposals, ranging from Marriott UK to TGI Friday’s, David Lloyd Leisure and Café Rouge. Its Beefeater and Brewers Fayre outlets are a small reminder of the group’s past in pubs and beer, although they bear little relation to traditional pubs and are, in truth, merely F&B adjuncts to the Premier Inns they sit next to. Would seeing the post-Costa Whitbread swallowed by a suitor really be such a big loss?

If Sachem Head and Elliott Advisers, the activist investors who were pressing Whitbread to demerge, were expecting an acknowledgment of their role from Ms Brittain after the Coke deal, they would have been sorely disappointed. When I asked her whether a sale would have happened without pressure from the duo, she was typically forthright. “I think that’s nonsense. We were clearly going to demerge and it was going to be on my watch. They did both ask for demerger, but they didn’t push for a sale and they were as surprised as anyone else when we announced the deal.” That’s them told!

Pure and simple

Ms Brittain also raised the enticing prospect that Whitbread could repeat the Costa success story with Pure, a London-based chain of 15 healthy eating fast-food stores. It acquired a 49 per cent stake two years ago for £6.8 million and has an option to buy it out within the next three years. She said Pure’s position was “not dissimilar” to Costa when Whitbread bought it – it paid £19m for the then 39-strong chain in 1995 - and represented “another great growth opportunity”.

Not very long ago, the Whitbread boss told how she felt that, assuming the Pure concept worked outside its London heartland, she could see no reason why pure could not be expanded to several hundred stores over time. I guess if Whitbread does retain its independence, then in a few years’ time we might have to once again start talking about the possibility of a demerger….or, of course, a sale.

Fortunes turn for Anand

On a different subject, it was pleasing to be able to report some good news from Greene King the other day. Last year proved something of an annus horribilis and there had even been vague chatter that CEO Rooney Anand might be forced to consider his position. Instead, the feisty Anand simply rolled up his sleeves and got on with the hard work of addressing the issues: scrapping Fayre & Square, stepping up bottom-end disposals and investing a few million quid in sorting out the issues of value, service and quality that had slipped a little.

Ok, so the weather and World Cup helped, but even so Greene King took market share and it feels like momentum has at last returned. He’s not out of the woods yet, but it does seem as though, as one analyst put it, Anand has “got his mojo back”.