Whitbread puts end to two-tier voting structure: Brewing giant decides to purchase remainder of investment company

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The Independent Online
WHITBREAD, one of the Big Four brewers, yesterday became one of the last of Britain's 100 leading companies to scrap its two-tier share structure, which has long been criticised by big investors.

The move met with approval in the City and was described by Sir Michael Angus, chairman of Whitbread, as showing that the company was very different in the 1990s from when the structure was set up in 1948.

Whitbread's enfranchisement also involves buying the 50.1 per cent of the Whitbread Investment Company it does not own for a maximum of pounds 234m.

Great Universal Stores, another constituent of the FT-SE 100 share index, recently enfranchised its shares and Whitbread's move now leaves Schroders, the merchant bank, as the odd one out.

The Whitbread Investment Company was established in 1956 by the then chairman, Colonel Whitbread, to protect small regional brewers from takeovers.

Its first investment was in Morland, the Oxfordshire brewer that last year fought off a bid from Greene King despite the investment company selling its 28.5 per cent stake to the predator.

Whitbread's enfranchisement will see the end of 16.6 million 'B' shares, which carry 20 times the voting rights of the 435 million 'A' shares in issue. The 'B' shares have 43.2 per cent of the votes.

Holders of the 'B' shares are being offered 1.27 new 'A' shares for every one held. WIC and Sam Whitbread, the former chairman of the brewing group, have accepted for their holdings in 4.9 per cent of the 'A' and 62.1 per cent of the 'B'.

The bid for WIC is on the basis of 'A' shares to the value of the investment company's asset value - around 765p at current market prices. There is a cash alternative, which will be equal to 97 per cent of WIC's asset value.

Whitbread's 'A' shares closed unchanged at 534p but the 'B', which have risen steadily recently, fell 188p to pounds 12.

Investors and Whitbread said the move to a single share structure would enable the company to make acquisitions. It should also lead to a wider investor base.

Peter Jarvis, chief executive, said: 'The announcements are the next crucial step forward in the development of this company.

'There is no doubt that the share structure had been a big help to Whitbread. WIC has been a powerful force for stability in the beer market. But as we looked forward the share structure and WIC looked less important.'

By buying WIC the company will have to reduce its holdings in two regional brewers - Brakspear and Marston Thompson & Evershed - and in Boddington, the pub operator.

Only half of WIC's holdings count towards Whitbread's share totals, but once the whole deal goes through it will have 21 per cent in each of the three companies.

Under the Government's Beer Orders, Whitbread is only allowed to have a 14.99 per cent holding in other brewing-to-pub groups.

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