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Elliott Stake joins pressure for Whitbread Split, analysts say

The emergence of Elliott Advisors in Whitbread Plc's shareholder registry reinforces pressure on the British company to consider splitting its Costa Coffee stores from its Premier Inn hotels.

Whitbread shares rose to 8.6 percent in London, the highest since September 2009 and more than when a smaller activist fund, Sachem Head, revealed a stake in December.

Elliott presented Whitbread management with a plan to split the company through a spin-off, the Financial Times reported. on Sunday, citing people familiar with the matter. Some analysts have argued for years that such a measure would generate greater value for shareholders. Whitbread CEO Alison Brittain said in January that the company remains open and committed to reviewing the structure of the company.

Morgan Stanley, Jamie Rollo [19659000] (Equal-weight, PT 4,200p)
Activism now likely to become the biggest driver of Whitbread's stock price, with a valuation away from deterioration of the fundamentals of the company. Elliott's spinoff proposal appears to be a "relatively minor risk" compared to a decommissioning plan involving the sale of real estate assets. "Pressure will grow in Whitbread to support his view that now is not the right time to separate."

Stifel, Jeffrey Harwood

(Buy, PT 4,300p)
The current moderate outlook for consumer stocks in the UK and the recent trade difficulties in Costa mean that it is not a fact that a dismembered coast reaches a higher rating than Whitbread currently. "It is possible that Costa will be separated from the rest of the group, particularly if an attractive offer for that business arises."

Bernstein, Richard Clarke


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