Doing the splits

17 February 2003

The demerged groups are now on the defensive. Management claims they can, and will, stand alone. But their arguments are not compelling, and the onus is on them to prove they can create value.

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Six Continents kicked off the demerger of its pubs and hotels businesses on Monday. Shareholders are expected to receive 50 shares of the hotel group Intercontinental Hotel Group and 50 shares of the pubs business Mitchells & Butler for every 59 Six Continents shares held. The companies will start trading on April 7. Tim Clarke is chief executive of the retail arm, which includes brands pubs and restaurants such as All Bar One and Harvester. At the hotels arm, Richard North has taken the helm for brands including Holiday Inn, Crowne Plaza, and Intercontinental.

Six Continents – formerly Bass announced the demerger in October 2002. The British company said the cost of separating the businesses would be about £109m. Six Continents' full year profit before tax and exceptionals fell 24% to £558m.

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