Whitbread exits Pizza Hut business

Whitbread has continued the process of scaling back its operations with a £99m deal to sell its 50 per cent stake in Pizza Hut UK to Yum! Restaurants.

The latest disposal follows Whitbread's sale of 239 pub restaurants to Mitchells & Butlers earlier this month, part of a strategy to focus on its core hotel and leisure operations.

Whitbread will receive £99m in cash from Yum!, its 50/50 partner in Pizza Hut UK. Parent company Yum! Brands owns fast food chains KFC, Long John Silver's and Taco Bell as well as Pizza Hut. The 50 per cent stake is valued at £112m in total, with the final figure adjusted for debt and other liabilities.

Pizza Hut UK operates more than 650 outlets. It was set up as a joint venture between Whitbread and Pepsico in 1982, with Pepsico's shareholding transferred to Yum as part of the demerger of its fast food interests in 1997.

The sale will need the formality of approval from Whitbread shareholders as well as clearance from the EU competition authorities.

Alan Parker, Whitbread chief executive, said: "'We have worked closely with our partners Yum to conclude a successful outcome within a short timeframe. Our exit from this joint venture is further evidence of the continuing progress we are making towards becoming a leaner and more focused group, concentrating our management and capital on those owned businesses in which we have leading positions and strong growth prospects."

The deal will increase speculation over Whitbread's TGI Friday's destination bar restaurant operation, which is franchised from the US brand owner. Whitbread had indicated that the underperforming TGI business was under review along with the Pizza Hut stake.