"acquisition of a portfolio of 19 hotels in Germany, ... for an undisclosed sum" - Would be nice to know what they paid.
"The acquisition includes 13 leasehold hotels (comprising 2,140 rooms), which are already open and trading, and six committed pipeline leasehold hotels (comprising around 970 rooms)"
I would prefer Premier Inn to be rolling out their own hotel specification, that they know works, rather than adopting someone else's design. Hopefully what they have bought fits or can be made to fit the Premier Inn model.
There have been many comments about WTB being ex growth, and operating in mature markets; but today's deal shows where they see growth coming from. The strategy seems sensible and simple - milk the mature markets, invest in new markets to feed the growth.
My own experiences of Premier Inn, the chips with everything buffet at that carvery place, and (although not a fan of cafe culture) a desire to back Costa Coffee over the tax dodgers at S*bucks drew me to WTB, I like to invest in places where I enjoy spending my own money. The ads are true, you can look forward to a comfortable night's sleep and a friendly helpful desk person to get you hooked up to the Wifi.
As you know I am not clever enough to understand value, so I relied on other people's analysis of the prospects for what is a conglomerated mixture of businesses. WTB was plugged hard for its growth performance potential and progressive dividend prospects, unreserved Buy from IC and others even when it hit £50. I believed it was serious about fixing its disposable cup problem, and that its venture into Pure had merit.
I have no idea where all the years of reinvested profit has gone, and despite a superior value experience Premier has not seen off the grotty alternatives. You know what has happened to the sp since, and the dividend is still crummy, so I checked out a while back. I can see why activists are talking about trying to split better value out of the group. Competition is fierce and the cost pressures have beaten the tourist boost from a weak pound.
My hearing is about as reliable as my stock analysis, did he say "Sir Leonard", it was Sir something in a stupid mocking voice, I guess the tape is on the interweb somwhere.
I can't believe the editor felt that 'documentary' was worth broadcasting to be honest. Using the PI brand in the title probably added a few to the viewing figures but it should have been clearly titled as about ISS rather than our beloved purple bricks and mortar.
I've just made use of my 2 for 1 perk and spent a few nights in Devon and Cornwall PIs and although not perfect - breakfast buffet was on offer rather than the cooked to order option - they cannot be faulted for cleanliness, comfort, facilities and ultimately value for money. Hence why both hotels were more or less full judging by the car parks.
All of the staff we met seemed engaged, unstressed and happy to be there so to label a documentary about one or two cleaners working in one hotel in London was poor journalism and well below the usual Dispatches level.
Hopefully ISS will sack the speed merchant for gross misconduct as well. Minging.
"...then he crossed a line mocking the integrity of "Sir Leonard", Morland you oaf, for having the grace to stand by his endorsement. I actually like staying in Premier Inn too."
I didn't see the programme, doesn't sound like I was missing much... beyond that can't really comment. Other than to point out that WTB regularly comes out very high - if not top - on reasonably authoritative, and independent, surveys of "best company to work for" and similar.
I too like staying in Premier Inn, with my most recent (and highly satisfactory) stay only a couple of weeks back... the model works very well for me, and for quite a few others too I know. So not surprised if Sir Lenny (short for Lenworth, I believe) is indeed genuinely a fan too... though whether he is also, like me, a happy (enough) WTB shareholder is open to question...
I saw the programme too, pretty much par for the course as far as Channel 4 is concerned. Always pushing their quasi-Marxist agenda, Channel 4 news is an aberration too, and WE own the bl**dy channel, how scandalous is that?
When you have no skillset and are on minimum wage life is really really hard - but we all knew that already, surely? I'm sure ISS are doing as badly at present as all the other facilities management outsourcees and are not profiteering, so I've no idea what the point of the programme really was.
Fortunately I'm sure only a handful of people would have been watching - everyone else is gorging out on Netflix...
Currently not invested in WTB I was nevertheless very disturbed by the Dispatches non-documentary last evening on Premier Inn although it was hardly about them. Morland Sanders setting up a dummy agency cleaner at ISS who worked (deliberately ?) so slowly after training and initially showing proficiency she then acted up and despite extra help from a supervisor got told to catch up in her own time. Evidently then booted. Sometimes you sweat! Proving how unfair hard work on the minimum wage is, especially if you are unwilling or useless.
Which makes Alison Brittain an undeserving fat cat. Garbage. Shame on Ch 4.
And then he crossed a line mocking the integrity of "Sir Leonard", Morland you oaf, for having the grace to stand by his endorsement. I actually like staying in Premier Inn too.
Did anyone notice the scene where the girl went off to shift in a lift carrying an almighty cup of Costa Coffee ... £2.65 right there, a room cleaned, a third of an hour on the minimum wage in her hand. Or a perk the programme failed to mention which went with the job, along with cheap pickings in the carvery next door at the end of breakfast servery etc? The clue that this was no destitute immigrant being abused, but rather a stereotypical time-poor tv production company runner.
Thanks, Gents, We all seem to think along the same lines about what's the right thing to do at WTB.
There is a case for splitting Costa & Premier, though as I pointed out in my last e mail (typing mistake and all) there are some synergies, and the brands can help promote each other; so for me, if both brands are making money, why sell one off?
Let these guys buy a 30% stake in the business then they can really have a say in how it's run.
"When all the cash has been handed back to shareholder, shareholder hands back the shares to the company saying sayonara !!... End result, a company in a mess loaded with debt -- and this practice is, believe it or not, entirely legal. Immoral, but legal... Private equity operates in a similar fashion, but usually behind closed doors..."
Well, surely handing back shares to the company would be a successful share buy-back, Games? But apart from that... yes, and not just "similar" to PE - straight out the PE playbook, page 1. ..
Hardboy, you are not going mad, it doesn't really work - perhaps one of these, maybe even two at a stretch, but not all three together! And why, exactly? In whose interests?! (I haven't seen any detailed report, only the headlines on the wires, so hard to be clear exactly what they're proposing).
I am all for a bit of provocative activism where there is latent value which management seems unable and/or unwilling to realise, but not seeing that here... there IS a latent value story in separating Costa, but they know that already - and I don't doubt that eventual separation has been the plan all along, they just don't think the time is right yet (and I probably concur). And of course, they don't need to sell it, they can just demerge it to existing shareholders (unless someone offers them the "right" price).
And sale and leaseback of hotels (and pubs?) has long been something WTB ARE doing, just in a measured and incremental way - all fine by me. Ultimately, they don't need the cash, and this all feels like "so last year" - leveraging up to the hilt, voluntarily, just when bond yields are surging would be strange indeed - 'suicide squad' stuff.
All that said - if our activist ends up playing the role of stalking horse for a PE approach (which may of course be their not-very-well hidden agenda)... fine by me. Start me at £50 and you have my attention... and after that, you can do what you want!!
"""I was a bit confused by this bit, if I understood it correctly "Costa sale, sale and leaseback of Premier Inn, debt piled onto the balance sheet " - Sell half the business, sell all the property and increase debt? How does that work?"""
HB it doesn't in reality but for the activist investor it's a dream come true and it's engineered to appeal to the shareholder who ultimately wants out.
1. Sell the properties, hand back the cash to the shareholder
2. Raise a load of debt - hand back the cash to shareholders
3. Sell half the business - hand back the cash to the shareholder
4. Meanwhile the excitement lifts the share price
When all the cash has been handed back to shareholder, shareholder hands back the shares to the company saying sayonara !!
End result, a company in a mess loaded with debt -- and this practice is, believe it or not, entirely legal. Immoral, but legal.
Private equity operates in a similar fashion, but usually behind closed doors, with all the debt raised whilst in private hands or upon flotation.
All along the principle of "The Greater Fool Theory" -- there'll always be one ready to stump up the money.
3.4% stake and they want to tell the company what to do - Get real! Over at Shaftesbury Sam Lee has over 25% stake and still can't get them to do what he wants.
I enjoyed my Cost Coffee with my Brewer's Fayre Breakfast the other day.
I was a bit confused by this bit, if I understood it correctly "Costa sale, sale and leaseback of Premier Inn, debt piled onto the balance sheet " - Sell half the business, sell all the property and increase debt? How does that work?
Reports in the Sunday press that Sachem Head is pushing for the full package: Costa sale, sale and leaseback of Premier Inn, debt piled onto the balance sheet and cash returned to shareholders, etc.
Broker snippets below (my own editing):
"These demands on cash, in particular, would seem to take the situation
closer to Sachem Heads previous activist investments in Autodesk and CDK Global, and to our aggressive Sum-Of-the-Parts scenario of 5,830p (+53% potential upside), so that shares could react positively today. We continue to note that Sachem Heads most successful activist investments have included tickets as high as $785m / 5.9% stakes, and the involvement of other activist funds, so that the board could have grounds not to consider these demands just yet (currently 3.4% interest in Whitbread ie $335m)..."
"In What if?, 3rd January 2018, we explored the potential upside associated with a Costa Sale and full opco propco separation. As we discussed at the time, we believe management is increasingly warming to the idea of a Costa sale (albeit after current turnaround initiatives have been implemented in 12-18 months)...
We see a very low probability of management wanting to engage with an Opco Propco separation of Premier Inn, however... if Costa can be sold at 13x 18E EV/EBITDA this would add c261p to our 3920p base case (4181p). At 15x this would rise to 4442p. This represents 10% to 16% potential upside from the current share price. In the event that management were to embark on a full sale and leaseback this would increase these values to 4747p in our upside case or 5658p in our blue sky scenario."
"Costa Express has continued to perform exceptionally well in the UK with total sales growth of 20.4% in the third quarter to almost £60 million (YTD: 18.7% total sales growth to over £150 million)"
Assuming they have 7,000 UK Costa Express machines (8,046 UK + International and allowing for rollout of new machines during this period) that would suggest revenue of £8,500 per machine in the last quarter. Revenue is not profit and its not clear what the rental costs are for these machines.
Costa Express has potential to make the brand truly ubiquitous in the UK. Easy to grow and profitable too.
"20 years ago over 50% of Whitbread revenues came from brewing and pubs. Today, pubs are off the menu (bar those supporting the hotel estate), while brewing is long gone. In their place are more than 2,300 UK coffee shops, and a 70,000 room hotel estate. Quite the transformation.
Costa revenues grew from Â£143m in 2005 to Â£1.1bn in 2015, compound annual growth of 23% a year, while Premier Inn checked in growth of 12%. However, while more recent performances remains respectable, there's been a notable slowdown in growth.
There are several short-term reasons for that, ranging from weakness in the London hotel market to lower city centre footfall hitting Costa's high street shops. New products, including self-service coffee machines and the stripped down 'hub' city centre hotels, may go some way to alleviate those pressures.
With less than 10% market share in key segments such as London hotels, there's still room for both brands to grow domestically in some areas. However, on the whole Whitbread is running out of new places to pitch up. That has inevitable consequences for the pace of future growth.
Major cost headwinds in the UK business are adding to the pain, and even the group's impressive cost control has failed to keep margins heading in the right direction.
Overseas expansion seems a reasonable response. So far Premier Inn's international expansion has focussed on Germany. Costa is further down the international road, and already turns a small profit. Especially positive noises are coming out of China.
We see no reason why both couldn't sell as well internationally as they do at home, but building international brands from scratch takes time. In the immediate future the challenge will be guiding a more mature UK business through less favourable economic conditions
Whitbread shares trade on a prospective yield of 2.8% and a price to earnings ratio of 14.3 times (a slight discount to its ten year average). "
It maybe though, that there is something in this and the cycle is indeed on the turn.
Personally I'm 50:50 on the viewpoint, as demographic shifts in age are still with us, but I have to admit to have been moving gradually away from some of the indebted (share buy back artists) companies of late.
The coffee issue wasn't India or China, but in the Middle East, now resolved without brand damage.
India has 60 outlets all Franchise
China has 425 outlets (so not so small beer at all) - 9 of which are Franchise.
As HB points out, the growth potential is pretty big, assuming they can make them all profitable of course.
"... Costa has been in India since 2005.... It seems pretty well established as a master Franchise..."
Great detective work, Sherlock! Difficult to find any mention of it from WTB itself... anything at all, to an almost suspicious degree. In any event, it can't be making any returns of any note, given that Costa's overall international profits are small enough at the moment - and that includes places where they ARE happy to admit to!
"Typically the franchise agreements are set such that you source all of your marketing, products and formats from the principle for a number of reasons... "
Yep, but it could be uneconomic and impractical to supply them with Costa's own coffee, if they don't produce it locally... If it got big enough for them as a market I would imagine that could change, but I am guessing that overseas efforts are mostly focused on China now. I would guess that they (WTB/Costa parent) would have some quality control and oversight on coffee sourcing, to make sure they're not just boiling up a big heap of Red Mountain...
The key question for your sources is, what do Starbucks do in China (eg. with coffee supply) and are Costa doing anything materially different? Given they are clearly setting out their stall to replicate what Starbucks have achieved over there.
But all in all, not seeing anything here - at this stage - to move the needle at all on overall stock appraisal or valuation...
It seems pretty well established as a master Franchise -- I think there might be a dispute but I'm not clear on any facts.
Typically the franchise agreements are set such that you source all of your marketing, products and formats from the principle for a number of reasons, the principle one might be to maintain a certain standard of product and image with the customer and also typically to maximise the returns to the company.
"Rumour has it that these units are not buying their coffee via Costa according to franchise agreements -- doesn't surprise me but not great for international returns I suspect... No facts here, just hearsay and speculation - but coming from a close source."
News to me, Games - partly as I didn't know they had ANY coffee units in India, or indeed franchise units in China (I thought they now had full control in South China, and an ongoing j.v. partner in North China). But I am prepared to be enlightened...
Maybe it is cheaper for the Chinese units to buy their coffee from elsewhere, and thus accretive to returns? Maybe Costa doesn't actually produce and supply coffee to these retail markets at all, they way they typically do in the UK? If they don't, maybe it's something they plan to introduce over time, as and when they buyild their presence?
"I wonder if Crozier is on board to do a deal quickly and offload Costa?"
I doubt it... I suspect they would much rather hold onto it for at least the next 2-3 years. And Crozier (who is non-exec, lest we forget) isn't really a dealmaker, more of a transformation / turnaround sort of guy, at least by his past CV - he didn't even manage to sell my ITV for me in the seven years he ran that!
But never say never, I suppose... maybe they'll get an offer they can't refuse?!
Rumour has it that these units are not buying their coffee via Costa according to franchise agreements -- doesn't surprise me but not great for international returns I suspect.
I wonder if Crozier is on board to do a deal quickly and offload Costa?
I'm guessing this isn't as simple or as smooth as the coffee, given that the funding for the coffee expansion comes from the parent company, how might that change I wonder?
No facts here, just hearsay and speculation - but coming from a close source.
"What if Whitbread decides to sell Costa and its real estate? We estimate that under such a scenario the sum of the parts value could be £47 in our upside case to £57 in our blue sky scenario.
While ROCE has been declining for Costa, the levels are still very high at c40% (EBIT ROCE) for the UK stores. These units generate strong cashflows and, for certain investors, this could be a key attraction. While Whitbread management is currently embarking on its own turnaround efforts, other buyers may also have perspectives on how performance might be improved (particularly if there could be any shared best practice from other coffee shop brands that may be owned) ...."
As foreshadowed here and all relevant boards... 2018 trading from tomorrow, so time to repeat last year's "virtual portfolio" challenge. Same rules, as per the papers - equal weighted, valid for the whole year with no switching, full owning-up at year end!
Marks & Spencer
I retain a bias toward UK exposure and 'Value' (the two closely related, obviously), with an expectation that the UK domestic outlook will clarify satisfactorily (if not wonderfully) this year. But it's no slam-dunk... and so hedged with a decent slug of overseas earnings and a general focus on "stock specific" stories - with LLOY the only real pure play on 'UK PLC' and associated sentiment. Ultimately, well aware that it's near-impossible to avoid losers as well as winners, I have asked the question - can I see 15% over 2018 (plus divis)? Without necessarily much help from the wider market.
Four stocks stay in from 2017, with CPI, IMB, ITV and SGC still to justify their original inclusion and getting another chance (SGC was a close call). Bonmarche has done its job as "speculative" midcap retail play; VOD still looks fine to me but harder to see sufficient upside in either valuation or financial reporting; CARD and WTB were tougher choices, both still good for the long term IMHO but I see their respective attractions now more finely balanced against likely persisting near-term headwinds.
I will doubtless be elaborating on the case for each of the "new" inclusions in the course of the year. FWIW stocks actively considered but failing to make the cut (as well as CARD and WTB): Braemar and SBRY (from my 2017 Top 10), then Aviva, BT, Debenhams, Gattaca, Merlin, Morrisons, Trinity Mirror.
FYI I own 7 of the 10 stocks, with all of CPI (still!), WPP, GSK under active consideration (probably in that order). I'd be surprised if I didn't buy into at least one in the course of 2018.
Hi Bill, chances we'll ever meet are slim to none, but I owe you a drink if we ever do.
From your 10, I either got involved or was already, in Bonmarche, Vod (already had), Whitbread, Card, Imperial (already in) and Sainsbury(already in). So while I have other holdings the ones that you highlighted and I liked I think I'll be 100% wrong in taking credit for selecting, so big thank you
Bon up 75+% since purchase, now why didn't I put all my eggs in that basket?
I'm also up in AA, which is another highlighted during the year however, I have 2 holdings 1 longer terms the other purchased in recent drop and has a sell set at 180 which wasn't too far off hitting the other day.
So, I for 1 am really looking forward to your 2018 picks and I wish you a profitable 2018.
I'll save you the trouble, ( I understand) past performance is not indicative of future results :D
That's it for 2017, in market hours anyway, so it is time to tot up the final results for my previously published 2017 Top Ten...
Q1 was not bad (in the end)... Q2 better, outperforming decently... Q3 not so much, a bit of a struggle throughout... and now a reasonable (if selective) Santa rally has delivered (belatedly) a decent enough Q4. It all means a positive absolute return for the year (+1.6%), albeit another good quarter for wider markets means I have underperformed the FTSE 100 by nearly 6% (and around 7% vs FTSE All-Share).
But it's not the full story - I went heavy on income plays, with dividends (including a couple of "specials") delivering a further 5.7%, around 50% more than the UK market yield. So I can point to a total portfolio return of 7.3% for the year - still below the 12% or so returned by the main UK indices, but somewhat nearer respectability - and preserving my status as (distinctly) average fund manager... making you some kind of return on your money, but not actually managing to beat, or even meet, an index.
Star performer, after a pleasing (albeit slightly suspicious) late run, was one of my small-cap speculatives, Bonmarche - up 60% for 2017! Then, at the other end of the size scale, comes Vodafone, an 18% return reflecting a year of solid success... just ahead of Card Factory (up nearly 17% after a rollercoaster ride), although CARD just edges out VOD in total return terms (+26% vs +24%). After that, a good Q4 sees Whitbread end the year up 6%, after 'promising' something much worse for most of it.
But that's it for gains, and 4 "winners" out of 10 doesn't really cut it, I concede. Both Sainsbury and Braemar ended near enough where they started (down just under 3%), but thereafter the disappointments pile up like roadkill... Imperial Brands falling 11%, ITV losing 20%, Stagecoach giving up 24% and Capita's year of woe and warnings means it brings up the rear, some 25% down - with some small solace that it's the only one I still don't own for real (but watch this space!)
How to rationalise this performance picture? Well, looking back at my original post, it seems I predicted it up-front a year ago - I quote... "a vague attempt at balance and diversification across the list, though it's probably still a bit too exposed to the UK economy - and hence any further Brexit downturn. Probably inevitable, given my usual bias towards 'value' and aversion to buying into momentum."
The hope was that the Brexit 'deal', and consequent UK economic outlook, would clarify - while there's finally some sign of that now, for most of the year it's remained mired in the mud of uncertainty and ungentlemanly exchange. There is the (related) theme of Value staying out of favour - albeit with 'green shoots' starting to appear just as the snow comes tumbling - and getting ever cheaper over the year as the market found reassurance in "reassuringly expensive" havens of Quality and Momentum.
So what for 2018? "Double-down" on the combo of cheap UK and underappreciated Value, in the expectation (or 'hope'?) that "this time NEXT year, Rodney".... or capitulate and jump on the market bandwagon, trusting the wheels stay on for another 12 months? Anyone following my thoughts for any length of time will know the answer ... but either way, all will be formally revealed in due course with my Top Ten for 2018 - as I always promised, and likewise enourage others to participate.
FWIW my 'real' portfolio fared better in 2017, up c.11.5% (total return c.15%). Nicely outperforming the FTSE 100 (+7.6%) and All-Share (+9.0%) in both price terms and their total returns of c.12-13%, though lagging the Global Market return of 20%. Given I've owned 9 of my Top 10 stocks for most of 2017 and I didn't set out to pick bad stocks, you can deduce much of my performance came from unexpected quarters - a good advert for diversification, of one's own thought processes and investment instincts as much as sectors and stocks!
Whitbread (WTB) is an attractive growth story and Berenberg says the headwinds facing the Costa Coffee and Premier Inn owner should not be of too much concern.
Analyst Stuart Gordon retained his buy recommendation and target price of £49.00 on the stock, which was trading flat at £38.62 at the time of writing.
He said Whitbread was an attractive growth story that is being affected by two significant headwinds weak like-for-like growth at Costa and the uncertainty about Brexit.
While not wishing to trivialise either, we remain convinced that in the case of Costa, the ongoing structural growth is better than the company is being given credit for and that despite the recent attentions of an activist investor it would need a significant offer to make a sale in the interests of shareholders, he said."
Commentary from Numis on the renewed break-up speculation - FWIW the analyst is extremely good on WTB. Edited highlights below:
"In 2013 when JAB acquired DE Master Blenders and Peets coffee it was clear that there could be further consolidation in the fragmented coffee market. At that time Costa had grown EBIT at a 5y CAGR of 25% and was achieving lfl sales growth in the UK of 5%. The difficulty now is that growth has slowed and the potential to achieve such high multiples on a spin-off may have reduced with it. In 1H18 Costas EBIT was flat and we forecast the same for FY18 as a whole. Lfl sales growth has been uneven in recent quarters: in the 3m to Feb 17 lfls fell by -0.8% and in the most recent quarter growth was only 0.1%. Currently Costa's international business makes an EBIT of only c£7m (LTM) and margin of 4.4%, with scope to improve as investments in China mature....
Notwithstanding these caveats, the sum of parts argument still has some credibility in our view. We note that Starbucks trades on a 2018 EV/EBITDA of 14.3x (Bloomerg estimates) and M&A in the sector has been at multiples over 15x. In contrast, WTB as a group trades on a FY19 EBITDA multiple of 8.8x and P/E of 15.0x, well below its cyclical high of 26x. We believe this partly reflects concerns on the UK consumer environment and is a response to a slowdown in EPS growth.
Valuation implications: Note that each 1x EBITDA turn for Costa is £243m of equity value or 133p per share (3.5%). Assuming that hotels/restaurants continue to trade on c.9x but Costa is valued at 14x EBITDA would add £1.2bn to fair value or 670p (17% vs yesterdays opening price of 3710p). The counter-argument is that the fundamental outlook remains weak and the combination of lfl sales growth of 1.7% (NUMe for FY18) and rising cost inflation will limit earnings growth to less than 3% this year."
well the bloomberg article speculates the asset value cannot improve if in one or two years it is clear expansion in e.g. china of the coffe brand is successful... one can imagine that both hotel and coffe brands could see some improvements internationally... bloomberg seems to say the only way is down...one can take the other view. some put some money on this other view this week.
Bloomberg: If Sachem Head is looking for a break up of Whitbread, it has probably left it too late. Both the investor and the company have missed the best moment to extract the maximum value from the company's portfolio, especially Costa.
When Alison Brittain became CEO in December 2015, coffee shops were riding high on the back of a buoyant U.K. consumer. At the time, the unit was valued at as much as 4 billion pounds by analysts.
What's more, if she had sold or demerged Costa two years ago from a position of strength, she would have had a good chance of being able to hold onto at least some of the proceeds to reinvest in the business.
And, with significant M&A activity in the hotels industry, even more value might have been generated from a sale of Premier Inn to an acquisitive global hotel chain looking to fill gaps in their portfolio.
Fast forward two years, and Costa's like-for-like sales growth has slowed significantly. Competition, particularly from Greggs and McDonalds at the lower end of the market, has ratcheted up, not to mention the fact you can't walk into a retailer these days without being offered a free coffee under some loyalty program or promotion.
Meanwhile, with inflation outstripping wage growth, and the prospect of higher interest rates, the consumer is turning cautious.
Today, analysts value Costa at closer to 2.5 billion pounds. And even if Whitbread were to get that money, an activist would be likely to demand the proceeds be returned to shareholders.
Some surgery would still make sense. The company's breakup value could be more than 50 pounds a share, compared with Wednesday's closing price of just under 40 pounds. There could still be an opportunity to release value from Whitbread's portfolio of hotels: Credit Suisse analysts value the property assets at about 5.4 billion pounds.
With a hedge fund likely to join the debate about what the company should look like, Brittain's strategy of continued expansion, with a sprinkling of cost-savings, should at last be given a good stir. I argued 18 months ago that Brittain should cut back her empire, only for her to rule out a breakup. The trouble for shareholders now is that the company's assets are looking not so much hot as tepid.
LONDON (Reuters) - Whitbread (WTB.L) shares jumped more than 7 percent on Wednesday after U.S.-based hedge fund Sachem Head Capital Management declared a 3.4 percent stake in the British hotel and coffee chain operator.
Whitbread, owner of Costa Coffee and Premier Inn, has been the subject of break-up speculation in the past.
Sachem Head has previously taken activist positions at companies, though it is unclear whether it will push for changes at the FTSE-100 leisure giant.
The hedge fund has already met with Whitbread management, according to a person familiar with the matter.
Before Wednesdays jump, Whitbread shares were down nearly 2 percent this year, having risen in part on hopes that Premier Inns domestic hotels would benefit from foreign visitors cashing in on the weak pound. They fell back when those benefits turned out to be smaller than expected.
The company warned in April of a tougher consumer environment, as rising inflation and muted wage growth forced consumers to rein in spending.
The shares closed about 7.5 percent higher at 3,990 pence.
Sachem Head, with about $4 billion (£3 billion) in assets under management, was founded in 2013 by Scott Ferguson, one of a number for former partners at Bill Ackmans Pershing Square Capital Management who have launched their own funds.
The New York-based firm has been popular with investors, both because of its steady run of positive returns and the fact Ferguson, who shies away from being called an activist, largely stays out of the headlines.
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