Whitbread rumoured to be planning potential sale of Costa

10th Oct 2013 14:42

Whitbread's shares surged on Thursday afternoon trading amid reports it could shed its Costa Coffee business. The London-listed hospitality giant, which also owns hotel group Premier Inn, is rumoured to be weighing up whether to set the coffee chain loose.Last month the group reported a 5.7% rise in like-for-like sales in Costa for the 24 weeks to August 15th and a 3% increase in like-for-like sales for the 11 weeks to mid-August.Oriel Securities analyst Jeffrey Harwood said Whitbread may split from the coffee chain on the basis that it "is difficult to believe that the group's current structure is optimal" based on its role within the company.However, he doesn't see a disposal or demerger any time soon.Harwood gave Whitbread's stock is a 'buy' given its intention to expand its UK network to 75,000 rooms by 2018. He also said Costa's UK and international expansion will see sales double to £2bn over the next five years.Shares rose 4.55% to 3,128p at 15:05 on Thursday.RD