Whitbread rules out David Lloyd demerger

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The Independent Online

Whitbread, the hotel and restaurant group, has pledged commitment to its David Lloyd Leisure chain of health clubs.

Whitbread, the hotel and restaurant group, has pledged commitment to its David Lloyd Leisure chain of health clubs.

Reports at the weekend suggesteda spin-off of the 56-strong chain into a separate listed company was on the cards. Sir John Banham, the chairman of the group, reportedly said the David Lloyd business had no obvious synergies with the rest of Whitbread, which owns the Marriott and Premier Lodge hotel brands and restaurant chains such as Pizza Hut and TGI Fridays.

Shares in the group rushed up more than 8 per cent in early trading followingthe reports, prompting Whitbread to distance itself from the remarks attributed to Sir John. A spokesman said his comments had been "taken out of context". In a statement yesterday, Sir John said: "Whitbread has no plans to sell or otherwise dispose of its interest in David Lloyd Leisure. It is an excellent business and one that we continue to invest in."

Whitbread bought David Lloyd, set up by the former Davis Cup tennis captain in 1982, for £200m nearly 10 years ago. It has more than 345,000 members and is aimed at the out-of-town, family sector, with emphasis on racquet sports. Whitbread shares closed up nearly 2 per cent at 862p.

Under the new leadership of Alan Parker, Whitbread has embarked on a major asset sell-off. In October it revealed plans to sell more than £800m of assets, promising to return half to shareholders. About half of its Marriott's hotels are being sold, and its part-share in the Britvic drinks business. It is due to float this year and could be worth £200m to Whitbread.

After the £505m acquisition of Premier Lodge last year, budget hotels account for the largest part of the group. Some City investors have questioned how long David Lloyd will stay within the group, given its hotel and restaurant emphasis. But a spokesman for Whitbread said it has continued to deliver strong returns and solid like-for-like sales. Last September, Whitbread said like-for-like sales rose 4.1 per cent in the first half of the year, one of the strongest performers in the group.

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