Six Continents to split restaurant business
Britain's Six Continents, the world's biggest international hotel group, said it would split off its pubs and restaurants in April, creating two new firms each estimated to be worth more than $3 billion.Six Continents, which runs Inter-Continental and Holiday Inn hotels as well as All Bar One pubs and Harvester restaurants, said both new businesses would launch cost-cutting programmes amid a tough economic climate for leisure stocks. But some investors questioned whether either new management team would be in charge for long, with private equity firms and trade buyers rumoured to be circling both businesses. "They've created two biddable businesses," said David Liston, a fund manager at Gerrards. Spawned from Bass after it sold its brewing interests in August 2000, Six Continents has been under pressure from investors to break itself up and return a chunk of cash to shareholders after failing to find a big hotel acquisition. The firm finally succumbed in October, saying it would create two separately listed firms and hand back 700 million pounds ($1.1 billion), or 81 pence per share, to investors. But the decision, which is aimed at producing greater focus in both businesses, has coincided with a downturn in its markets and it has disappointed investors as they were warned dividends would fall 38 per cent in the year after the split. Six Continents said the hotels business, which will run more than 3,300 properties, would be called InterContinental Hotels Group Plc (IHG). The 2,000 strong pubs and restaurants business will be called Mitchells & Butlers Plc (MAB). Six Continents shareholders will receive 50 IHG and 50 MAB shares for every 59 Six Continents shares they currently own. Conditional dealing in both stocks are expected to start on April 7. IHG is expected to enter the UK's FTSE-100 index of leading shares, while MAB may slip into the FTSE-250.