Whitbread PLC (LSE:WTB), the owner of brands such as Brewers Fayre and Beefeater, has listed for sale 250 of its pubs/restaurants for £600mln, a report from the Times revealed.
Bids will be limited to established pub operators only.
Harvester-owner Mitchells & Butlers PLC (LSE:MAB) (M&B) is tipped as the front runner for purchase.
“[Limiting bidders] is logical as Whitbread still wants these sites to offer food,” said analysts at Barclays PLC (LSE:BARC).
Sites for sale are believed to be marginal or loss-making, according to the UK bank.
In total, the Premier Inn owner has around 800 pubs/restaurants.
The hospitality group is trying to get the deal done quickly to avoid a long-drawn-out process, reports added.
Approaches to groups like M&B, Heineken N.V. (Frankfurt Code :HEIA), Greene King (LSE:GNK) and Punches about the purchase have been made, as Whitbread wants to “test the water”.
M&B, which was upgraded by brokers on Thursday, has completed deals with Whitbread in the past, including a straight swap of hotels for pubs/restaurants in 2008.
Barclays is impressed by the planned sale, arguing that siphoning off the weakest parts of the business indicates management’s “clear focus on return on capital employed”.
An analyst at the bank said: “We consider the potential sale process positive news given our view that this business has been a source of value destruction for the group.”
“[This] only enhances our positive view on the upside potential.”
Shares in Whitbread rose over 1% on Friday after opening at 3,425p, a 16% discount to Barclay’s target price of 4,000p.