Business Weekly - Cambridge, UK

If the sale goes through as planned in August, it will take Whitbread’s income from trade sales up to almost £600m over the past year following sales with Pizza Hut, TGI Friday and a large slice of its pub restaurants.

The agreement to sell DLL follows weeks of press speculation which forced Whitbread into admitting it had received numerous bids in excess of £900m for the division.

It will enable Whitbread to concentrate the resources of the company on its ambitious growth plans for its hotels, restaurants and coffee shops.

Whitbread chief executive, Alan Parker said: “Following the success of the management action taken in DLL over the last 18 months and a review of the health club market, we have decided that this sale represents excellent value for our shareholders.

“Whitbread is now well placed to deliver the ambitious growth plans for its hotels, restaurants and coffee shops.”

The sale follows an 18 month recovery programme at DLL, which has seen the business grow to 60 clubs in the UK and Ireland – including 45 tennis centres – seven in the Netherlands, one in Spain and one in Belgium, with more than 370,000 members.

For the year ended 1 March 2007, DLL generated an operating profit of £37.1m on turnover of £237.3m.

Whitbread will initially use the proceeds from the sale – which is conditional upon an appropriate competition clearance being obtained from the European Commission – to pay down debt.