Whitbread’s (LON:WTB) Premier Inn asset is coming under scrutiny following the FTSE 100 group’s decision to sell its Costa Coffee business to Coca-Cola in a £3.9-billion deal, The Telegraph reports. The sale, announced last week, comes after Whitbread said earlier this year that it was planning to demerge the business.
Whitbread’s share price rose in the previous session, adding 14.33 percent to 4,596.00p following the news of the deal, as the company noted that the majority of the proceeds will be returned to shareholders. The group’s shares have added more than 22 percent to their value over the past year.
Premier Inn in focus
The Telegraph reported over the weekend the activist US fund which pushed Whitbread to spin off Costa Coffee had signalled no end to its campaign as it prepares to seek even higher returns from Premier Inn, the company’s main remaining business. Elliott Advisors “will continue to be the largest investor in Whitbread”, sources told the newspaper.
The Sunday Times meanwhile reports that industry observers predict that that global groups such as Holiday Inn and Crowne Plaza owner InterContinental Hotels Group (LON:IHG), AccorHotels and Marriott International could see Premier Inn as an attractive asset to add to their portfolios of brands. Private equity giants such as Blackstone could also be interested in the business’ valuable property assets.
Analyst ratings update
The 17 analysts offering 12-month price targets for Whitbread for the Financial Times have a median target of 4,450.00p, with a high estimate of 5,400.00p and a low estimate of 2,000.00p. As of August 31, the consensus forecast amongst 22 polled investment analysts covering the blue-chip group advises investors to hold their position in the company.