Caffeine kick: Whitbread announces £2bn share buyback after £4bn Costa Coffee sale
Whitbread is planning to give shareholders well over half of the money it made from selling high street coffee chain Costa for £4bn late last year.
The Premier Inn owner promised an extra £2bn windfall for shareholders today, a month after concluding the megadeal with Coca-Cola.
Read more: Whitbread warns of stalling profits as it kicks off share buyback
It will be added to £500m in share buybacks which were announced last month, bringing the total to £2.5bn.
The company also revealed it will find a further £220m in savings from operating and capital costs over the next three years.
Chief executive Alison Brittain and the Whitbread board took the decision to jettison Costa after pressure from activists, including Elliott Management, the biggest shareholder at the time.
The sale has allowed Brittain and her team to focus their energy and resources on the Premier Inn chain of hotels.
The company already has around 74,000 rooms across the UK, around one in ten of the country’s stock. But the company is targeting 110,000 rooms in the UK, and a further 60,000 abroad.
To reach its targets the company will need to expand rapidly in Germany, where it started trialling its hotels in 2016.
Read more: EU competition watchdog approves Coca-Cola's merger with Costa Coffee
There are around 900,000 rooms in Germany, split over more small owners Whitbread said.
In Germany, “Whitbread sees significant long-term potential to replicate the success of Premier Inn in the UK,” the company said this afternoon.