Whitbread to spin off Costa Coffee following shareholder activism

Whitbread has announced that Costa Coffee will be spun off as a separate company, according to Reuters.

The move comes after pressure from investor activists pushed for the coffee chain to be listed as a separate company from the parent group. Costa, which is the world’s second-largest coffee chain, is expected to leave the Whitbread brand within the next two years.

Investor activists including Elliott Advisors, run by Paul Singer, and US-based Sachem Head have been calling for the split in order to capitalize on long-term opportunities and unlock value.

Chief executive Alison Brittain said: “Given the progress Whitbread is making, we are confident that both Premier Inn and Costa will soon be businesses of sufficient strength, scale and capability to enable them to thrive as independent companies.”

Whitbread said the split would take place as soon as possible in order to maximize value for shareholders. Brittain said the decision to make the split was not due to shareholder pressure.

Elliott Advisors, a part of Paul Singer’s hedge fund firm, had a disclosed 6% stake in Whitbread and estimated the total market capitalization of the separate companies to be £10bn, up from a current value of £7.7bn.

Whitbread recently announced growth in full-year revenue of 6.1% to £3.3m and a 4.5% rise in underlying profit before tax to £591m, above the forecast figure of £585m.

Plans for worlds first green investment bank

The Business Secretary set out this week, his vision for the Green Investment Bank (GIB) as a new and enduring institution to complement existing green policies.

Vince Cable published a progress report on the GIB setting out more detail on its governance and business model.

The GIB’s mission will be to accelerate private sector investment in the UK’s transition to a green economy. It will play a vital role in addressing market failures which are holding back private sector investment.

Sectors likely to be eligible for intervention initially include offshore wind, non-domestic energy efficiency and waste. Work is ongoing to explore other sectors which will change over time.

Its initial remit will be to focus on green infrastructure assets and on the twin objectives of achieving significant green impact and making financial returns.

As the bank will need to be approved by the European Commission before it can be established, there will be a phased approach. Once it has been agreed, the GIB will be enshrined in legislation confirming its independent status as an enduring institution with a key public role.

In order to make rapid progress, the Government will make direct, state-aid compliant investments in green infrastructure projects from April 2012 until these investments can be transferred to the GIB.

The Business Secretary is also setting up an advisory group to provide strategic direction of the GIB. Today we can announce that Sir Adrian Montague will chair this group of independent finance experts.

Vince Cable said: “This is an opportunity for the UK to lead the way in the transition to a low carbon economy with the world’s first dedicated Green Investment Bank.

“The GIB will become a key component of this transition which needs significant investment over the coming decades.

“I’m delighted that Sir Adrian Montague has agreed to chair the advisory group. He has a wealth of experience that will help with the strategic direction of the GIB.”

Sir Adrian Montague, chair of the advisory group said: “The Green Investment Bank is a genuinely radical innovation. The keys to the GIB’s success are going to be precise targeting and brilliant execution.

“It is both a privilege, and an irresistible opportunity, to have been asked by the Secretary of State to chair the new institution’s Advisory Board. My first task is to advise on the membership of the Advisory Board. The GIB needs the best people in order to get off to a flying start.”