Whitbread break-up - time to split? 

If I had £1 for every time I’d heard the Whitbread break-up rumour, I wouldn’t be penning this column to pay for my new son’s nappies. Any company that is deemed to be a conglomerate – and Whitbread and Rank both fall into that category – will always attract such speculation. It goes with the territory. But that is not to say that the rumours are not true. My understanding is that two private equity firms, Permira and CVC Capital Partners, have indeed been sounding out interest from a mixture of financial and trade parties that might be interested in looking at whether a Whitbread break-up is viable. Both firms are said to have approached Duke Street Capital, which owns Esporta, to see whether it would be interested in buying David Lloyd Leisure (worth somewhere north of £500m), while Mitchells & Butlers has been tipped as an obvious buyer for a big chunk of the Beefeater and Brewers Fayre pub-restaurant division. But the intriguing aspect is the suggestion that Permira would seek to merge Premier Travel Inn with its own Travelodge chain, bringing together the UK’s two biggest budget hotel chains to create a behemoth with a combined total of more than 700 properties. Some have questioned whether such a merger would get through the competition authorities. That would probably depend on whether budget hotels were viewed as a market in their own right or as part of the wider hotel industry. Given that recent expansion by both companies has tended to focus on urban locations, I cannot see it being an issue. But my view is that, for the time being, a move on Whitbread is unlikely. Under Alan Parker, the new chief executive, the shares have performed strongly. In biting the bullet and selling Marriott he has probably bought himself sufficient time to develop a coherent strategy and ensure Whitbread’s long-term future.