Demerger/Offer for Pubs&Bars

Whitbread Holdings PLC
20 March 2001

FULL DETAILS

Not  for release, publication or distribution in or into the
United  States of America, Canada, Japan, Australia  or  the
Netherlands

Whitbread Holdings PLC

Pubs and Bars division
Return of value of 230 pence per share

Introduction

The Board of Whitbread Holdings announces that it has
entered into an agreement with a company specially formed by
MGPE ('NewCo'), which:

*  values its Pubs and Bars division at £1,625 million; and
*  provides for, inter alia, a demerger of the Pubs and Bars 
   division, following which NewCo will make a cash offer
   to Whitbread Holdings shareholders for Pubs and Bars.

The Offer will provide for a cash payment of 230 pence per
share (approximately £1,130 million in aggregate) to
Whitbread Holdings shareholders and will include a loan note
alternative.  Following completion of the Offer, the
aggregate amount received by shareholders, including £42
million already returned through share buy-backs in November
and December last year, will represent approximately 75 per
cent. of the net value realised from Pubs and Bars.

Approximately £445 million, representing the balance of the
value realised after paying transaction related costs, will
be retained by the Whitbread Group and applied to reduce
borrowings.

The Pubs and Bars division consists of the following:

*  Whitbread Pub Partnerships, which comprises
   approximately 1,710 leased pubs;

*  Pubs Inn Line, which comprises approximately 1,095
   managed pubs; and

*  High Street Brands, which comprises approximately 193
   branded pubs and bars.

For the financial year ended 4 March 2000 and the six months
ended 2 September 2000, the Pubs and Bars division generated
earnings before interest and tax of £173.9 million on
turnover of £668.5 million and £88.0 million on turnover of
£341.3 million, respectively.

Dresdner Kleinwort Wasserstein is acting as financial
adviser to Whitbread Holdings.  Deutsche Bank and HSBC are
acting as corporate brokers to Whitbread Holdings.

Lehman Brothers is acting as sole financial adviser to MGPE
and NewCo and as sole lead arranger of the debt financing.

Description of the Transactions and the share capital
consolidation

The Transactions will involve the following principal steps:

*  the businesses comprising the Pubs and Bars division
   will be demerged from Whitbread Holdings to Fairbar
   Limited, a specially created company outside the
   Whitbread Group, by means of a reduction of capital
   under section 135 of the Companies Act.  On the
   reduction of capital becoming effective, the nominal
   value of each Whitbread Holdings Share will be reduced.
   In consideration for this reduction, Whitbread Holdings
   shareholders will be allotted one share in Fairbar for
   each Whitbread Holdings Share held by them.

*  the Offer will then be made in cash (with a loan note
   alternative) by NewCo for the whole of the issued share
   capital of Fairbar on the basis of 230 pence for each
   share in Fairbar.  The Offer will be conditional upon
   acceptances being received in respect of at least 30 per
   cent. of the issued shares of Fairbar.  Under the
   provisions of Fairbar's articles of association, NewCo
   will be entitled to acquire compulsorily the remaining
   issued Fairbar shares upon the Offer becoming
   unconditional.

The Demerger is conditional upon certain tax clearances
being received and the passing by Whitbread Holdings
shareholders of the necessary resolution to approve the
Demerger and the reduction of capital.  The Demerger is also
conditional upon NewCo receiving competition approval from
the European Commission for the Offer.  The reduction of
capital is subject to approval by the Court.

Whitbread Holdings has agreed that upon the occurrence of
certain events NewCo may terminate the agreement and
Whitbread Holdings will make a payment to NewCo, in
recognition of its costs, of between £15 million and £35
million, depending on the circumstances.  These events
include: the Board changing its recommendation of the
Transactions; the resolution to approve the Demerger not
being passed by 15 May 2001; the tax clearances referred to
above not being received or the reduction of capital not
becoming effective, in either case by 23 June 2001; and the
Offer failing to become unconditional.

The Offer will be made in cash and will include an option
for shareholders to elect to receive guaranteed loan notes
in respect of all or part of the cash consideration to which
they would otherwise be entitled, subject to a maximum loan
note availability of £250 million.

To maintain comparability of future and historical earnings
per share, dividends per share and share price, Whitbread
Holdings proposes, conditional upon the reduction of capital
becoming effective, to implement a share capital
consolidation to reduce the number of issued Whitbread
Holdings Shares.  The share capital consolidation will
reduce the existing number of Whitbread Holdings Shares by
an amount that reflects the value returned to shareholders
by the Transactions as a proportion of Whitbread Holdings'
market value.

Background to and reasons for the Transactions

The return of value will complete the radical restructuring
of the Whitbread Group announced by the Board in October
last year.  Future Whitbread will focus on growth segments
of the UK leisure market where the Group already occupies
leading positions.  Further explanation of the background to
and reasons for the Transactions as well as a description of
Future Whitbread are set out in Appendix I to this
announcement.

Group prospects

Final results for the Whitbread Group for the year ended 3
March 2001 are in the course of preparation and will be
announced on 2 May 2001.

The Board is confident that its strategy of focusing on
three growth sectors of the UK leisure market - lodging,
eating out and active leisure - will continue to produce
benefits in terms of shareholder value.  The Group's brands
hold leading positions in these sectors and the Board
believes that the prospects for growth, both through market
share gains and organic expansion, are excellent.

In addition, the Board believes that there are significant
opportunities to accelerate the improvement in returns
generated by the Future Whitbread brands and further enhance
shareholder value.

Dividend policy

The Board expects, upon the Transactions being implemented,
to adopt a dividend policy which reflects the growth
prospects of the Whitbread Group, initially based on an
overall dividend cover of approximately 2.5 times.  Such a
policy would be implemented for the first time in respect of
the financial year to 2 March 2002.  The final dividend for
the year ended 3 March 2001, likely to become payable in
July 2001, will be announced with the final results on 2 May
2001.

Management of the Whitbread Group following the Transactions

Stewart Miller, Managing Director of the Pubs and Bars
division, will become Managing Director of David Lloyd
Leisure upon the Transactions being implemented.  He will
continue to be a Director of Whitbread Holdings.

Circular and Timetable

A circular to shareholders will shortly be posted convening
an extraordinary general meeting of Whitbread Holdings for
shareholders to approve the steps required to implement the
Demerger.  The Directors of Whitbread Holdings intend to
recommend that shareholders approve the Demerger.  The EGM
is expected to be held on 20 April 2001 and the Offer is
expected to be made in early May.  The Board expects that,
subject to approval by Whitbread Holdings shareholders of
the Demerger and the Offer becoming unconditional, the
return of value will be substantially complete by early June
2001.

Change of name

Whitbread Holdings intends to change its name to Whitbread
PLC.  Shareholders will be asked to approve the change of
name at the EGM.

Information on MGPE

MGPE, the private equity arm of Deutsche Asset Management,
is a leading European private equity house with funds under
management of approximately Euro 2.5 billion.  Its strategy
is to invest in companies of high quality that have a strong
market position, good brands, growth potential and
competitive advantages resulting from product superiority.
Since inception, MGPE has made 48 investments with a total
enterprise value of over Euro 10 billion.

A conference call for analysts will be held at 9.45 a.m.
today.  To participate, dial 020 8781 0596 and ask for the
Whitbread Holdings conference call.

Enquiries:

Whitbread Holdings
David Thomas                          [phone]
David Reed                            [phone]

MGPE
Jon Macintosh                         [phone]
Chris Hanna                           [phone]

Dresdner Kleinwort Wasserstein        [phone]
David Barclay
Nigel Binks

Lehman Brothers                       [phone]
Peter Combe
Adrian Fisk
Michael Mackinnon

Gavin Anderson & Company              [phone]
(for Whitbread Holdings)
Chris Salt
Laura Hickman

Smithfield Financial (for MGPE)       [phone]
John Kiely

Dresdner Kleinwort Wasserstein, which is regulated in the
United Kingdom by the Securities and Futures Authority
Limited, is acting for Whitbread Holdings and for no one
else in relation to the matters discussed herein and will
not be responsible to anyone other than Whitbread Holdings
for providing the protections afforded to its customers or
for providing advice in relation to the matters discussed
herein.

Lehman Brothers, which is regulated in the United Kingdom by
the Securities and Futures Authority Limited, is acting for
MGPE and NewCo and for no one else in relation to the
matters discussed herein and will not be responsible to
anyone other than MGPE and NewCo for providing the
protections afforded to its customers or for providing
advice in relation to the matters discussed herein.

Appendix I

Background to and reasons for the Transactions

In recent years, the Whitbread strategy has been to develop
its portfolio of brands and businesses to take advantage of
emerging trends and opportunities in the UK lodging, eating
out and active leisure markets.  Most notably:

*  the  opportunity to create an internationally branded  UK
   network for four-star hotels;

*  the  rapid  growth in demand for value for  money  budget
   hotel accommodation;

*  growing expenditure on eating outside the home;

*  increased  consumer  interest  in  fitness  and   healthy
   lifestyles; and

*  consumer preference for branded operations.

This strategy lay behind the acquisition of Swallow Hotels
in January 2000, the disposal of the Whitbread Beer Company
in May 2000 and the sale in October 2000 of Whitbread's
interest in the First Quench off-licence business.

The Board believes that Future Whitbread will benefit from a
more effective overhead.

Future Whitbread

Future Whitbread will be a focused UK leisure business with
strong market positions in hotels, restaurants and active
leisure.  The Board's priorities, on behalf of
shareholders, are to grow the business and to achieve
annual improvements in return on capital.  These are being
achieved by:

*  growing the profitability, scale and market share of the
   Group's leading brands;

*  seeking new brands that have the potential to reach
   significant scale;

*  managing the business so that economic value is added by
   each activity;

*  becoming the employer of choice in UK leisure; and

*  working to meet the Board's responsibilities to the
   wider stakeholders in Whitbread Holdings, including
   commercial partners and the communities in which its
   brands operate.

Whitbread Holdings is the UK's largest operator of budget
accommodation (by number of outlets and number of rooms).
It is also one of the largest operators of family
restaurants (by number of outlets) and the largest sports,
health and fitness operator (by number of members).  A
description of each major business area follows:
     
Hotels

The Whitbread Hotel Company combines a leading brand in the
premium hotel market, Marriott, with the market leader in
the budget accommodation sector, Travel Inn.

Travel Inn currently operates 263 hotels with over 14,000
rooms.  The Board intends to increase the Travel Inn network
to at least 350 hotels and 20,000 rooms by 2003.

The Board believes that there is a significant opportunity
for further organic growth in the four-star market.
Whitbread Holdings has the sole UK franchise for Marriott
and achieves a significant yield premium to the market.  The
Whitbread Hotel Company operates nearly 10,000 rooms in the
UK from 61 four and five-star hotels.  A further three
hotels are currently in the pipeline.
     
Restaurants
     
Whitbread Restaurants is one of the largest operators by
number of branded family restaurants in the growing and
highly competitive eating out market.  For the six months to
2 September 2000, two branded estates, Brewers Fayre and
Beefeater, including their adjacent Travel Inns, accounted
for 90 per cent. of the division's operating profit.

The Brewers Fayre estate (including the Brewsters brand) is
one of the country's most successful restaurant chains with
over 385 outlets which average weekly sales of approximately
£22,000 each.  The Beefeater estate (including Out & Out)
has 257 outlets which average weekly sales of around £20,000
each.  They operate from some of the UK's best family
restaurant sites.

The Whitbread Holdings restaurants portfolio also includes
Bella Pasta, Cafe Rouge, Costa, Pizza Hut, TGI Friday's and
Maredo in Germany.
     
Sports, Health and Fitness
     
David Lloyd Leisure is the largest operator by number of
members in the fast growing active leisure market with 44
large clubs and more than 210,000 members.  Whitbread has
grown the brand from 14 clubs since its acquisition in 1995.

The strength of the David Lloyd Leisure brand enables it to
outperform the active leisure market, with both sales per
member and membership retention above the industry average.

The Board intends to continue the vigorous growth of David
Lloyd Leisure through: further improvements in like-for-like
sales performance; the 11 clubs which have been open for
less than three years reaching mature membership levels; and
organic growth through a new club pipeline which already
includes nine sites.  In addition, the David Lloyd Leisure
franchise is to be extended to the majority of the 51
Marriott and Swallow leisure clubs.

Beer and Other Drinks

The Whitbread Beer Company was sold to Interbrew on 25 May
2000, although there remains a continuing beer production
and sales activity.  The terms of the sale of The Whitbread
Beer Company included arrangements for Whitbread to retain
the people and the necessary production capacity to ensure
compliance with its obligations for the remaining period of
the licences under which Whitbread brews Heineken and
Murphy's.

Other drinks comprises Whitbread's 25 per cent. share of
Britannia Soft Drinks.  Whitbread's interest in First Quench
was sold on 16 October 2000.

Appendix II

The  following  definitions apply throughout  this  document
unless the context requires otherwise:

'Board'                 the Board of Whitbread Holdings;
                        
'Companies Act'         the Companies Act 1985 (as amended);
                        
'Court'                 the High Court of Justice of England
                        and Wales;
                        
'Demerger'              the proposed demerger of the Pubs and
                        Bars division to Fairbar in
                        anticipation of the Offer;
                        
'Deutsche Bank'         Deutsche Bank AG London;
                        
'Dresdner Kleinwort     Kleinwort Benson Limited;
Wasserstein'            

'EGM'                   the extraordinary general meeting of
                        Whitbread Holdings;
                        
'Fairbar'               Fairbar Limited;
                        
'Future Whitbread'      the Whitbread Holdings Group excluding
                        the Pubs and Bars division;
                        
'HSBC'                  HSBC Investment Bank plc;
                        
'Lehman Brothers'       Lehman Brothers Europe Limited;
                        
'MGPE'                  Morgan Grenfell Private Equity
                        Limited;
                        
'NewCo'                 Shopgood Limited, a company specially
                        formed by MGPE for the purpose of
                        making the Offer;
                        
'Offer'                 the offer to be made by Lehman
                        Brothers on behalf of NewCo for
                        Fairbar on the terms set out in the
                        Framework Agreement dated 20 March
                        2001 between Whitbread Holdings and
                        NewCo;
                        
'Pubs and Bars          those businesses within Whitbread
division' or 'Pubs      Holdings' pubs and bars division known
and Bars'               as 'Whitbread Pub Partnerships' 'Pubs
                        Inn Line', 'High Street Brands' and
                        'Dome';
                        
'Transactions'          together the Demerger and the Offer
                        and any steps required to give effect
                        thereto;
                        
'UK'                    the United Kingdom of Great Britain
                        and Northern Ireland;
                        
'Whitbread'             Whitbread PLC;
                        
'Whitbread Group' or    Whitbread Holdings and its subsidiary
'Group'                 undertakings;
                        
'Whitbread Holdings'    Whitbread Holdings PLC; and
                        
'Whitbread Holdings     the ordinary shares of 450 pence each
Share(s)'               in the share capital of Whitbread
                        Holdings.