Sir Michael Angus, Whitbread chairman, declined to comment on suggestions that other bidders had been excluded from the sale process. He said the pubs deal would play to Whitbread's strength of managing large retail premises under a range of formats.
Sir Michael confirmed that the deal would necessitate either the sale of a large number of pubs or the withdrawal from brewing, but he declined to be drawn on details before the deal has been completed.
Giving few additional details of the planned pounds 2.5bn pubs deal, which will be satisfied largely by the issue of Whitbread shares to Allied investors, Whitbread said it was considering a share buyback for the first time. It will seek permission from shareholders to buy back up to 10 per cent of its equity at its annual meeting next month.
The comments came as Whitbread reported a 3 per cent rise in underlying profits to pounds 365m for the year to February. The figures were hit by weak spending last year, although the company said there was evidence that confidence was now improving.
Profits at the tenanted pubs fell by 6.5 per cent, although this was due to pub disposals. Profits at the group's restaurant division also fell, but the company claimed this was largely due to the sale of 40 underperforming Beefeater sites. Cafe Rouge sales fell by 3 per cent, but sales grew strongly at the 51-strong Costa Coffee chain.
In brewing, Whitbread's operating profits rose by 16 per cent, with volumes rising slightly in a falling beer market. Stella Artois sales rose 32 per cent; it is now the eighth-best selling grocery brand in Britain behind Coca-Cola and Walkers Crisps, but ahead of Pampers and Silver Spoon sugar. The David Lloyd Leisure clubs are doing well; eight are due to be added to the present 28.
The shares rose a further 29p to 1,115p yesterday.