An activist investor that has built a stake in Whitbread (LON:WTB) is likely to push for a break-up of the Costa Coffee and Premier Inn owner, The Telegraph has reported, quoting a shareholder in the company. The news comes after the blue-chip group recently reported a rise in revenue and profits for the first half of its financial year.
Whitbread’s share price fell in London trading yesterday, shedding 2.65 percent to close at 3,888.00p, underperforming the benchmark FTSE 100 index which rose 0.80 percent in the session. The group’s shares have added more than 10 percent to their value over the past year, as compared with an over seven-percent gain in the Footsie.
Push for break-up?
The Telegraph reported yesterday that Whitbread’s top 20 investor Old Mutual Global Investors (OMGI) believed that Sachem Head, a New York-based fund, would push for change. The fund is run by Scott Ferguson, a former partner at Bill Ackman’s Pershing Square Capital Management hedge fund, and while the majority of its investments are just buy-and-hold share purchases it has the mandate to take an activist approach.
“I imagine they will be looking at a break-up,” Ed Meier, part of Richard Buxton’s UK equities team at OMGI, told the newspaper. “To us, it is one of the more obvious break-ups on the market to be honest.”
Meier further noted that the strength of the management teams at both Premier Inn and Costa Coffee “supports the case for a break-up” as each company on its own would be run by “high calibre people”.
Analysts on Whitbread
The 22 analysts offering 12-month price targets for Whitbread for the Financial Times have a median target of 4,125.00p on the shares, with a high estimate of 5,000.00p and a low estimate of 3,200.00p. As of December 9, the consensus forecast amongst 28 polled investment analysts covering the blue-chip group advises investors to hold their position in the company.