>>> Whitbread activist Sachem Head demands taking on GBP 1bn debt to finance sha

Whitbread activist Sachem Head demands taking on GBP 1bn debt to finance share buyback - report

The activist investor Sachem HeadCapital Management has demanded that the FTSE-100 leisure company Whitbread [LON:WTB] should take on GBP 1bn (EUR 1.28bn) of debt to finance a share buyback, the Financial Timesreported. The newspaper cited people with knowledge of a meeting between Sachem Head’s founder Scott Ferguson and Whitbread Chief Executive Alison Brittain in October 2017 for the information.
The report went on to cite others close to Sachem Head, who denied the claim about Ferguson’s demand. Whitbread currently has GBP 862m of debt, the item said, citing data from S&P Global.
The people were quoted in a longer report about Whitbread’s strategy in the face of an activist campaign by Sachem Head.
Ferguson also demanded that Whitbread sell or spin off its Costa chain of coffee shops and sell and lease back properties, the item said.
The people cited by the report said Ferguson seemed to be demanding that Whitbread implement all of his demands, rather than presenting a range of options.
People with knowledge of the meeting said Brittain informed Ferguson that she would not consider selling and leasing back assets.
Sachem Head and Whitbread refused to comment on the discussions’ details, the article continued.
Brittain has indicated that she held a further meeting with Ferguson this month in New York, describing the meeting as “courteous,” the report said. However, neither Brittain nor Ferguson altered their positions, the item added, citing people familiar with the discussions.
Whitbread’s large shareholders include Massachusetts Financial Services, OppenheimerFunds, Fiduciary Management, Longview Partners, Standard Life Aberdeen and Walter Scott & Partners, the newspaper said. The investors refused to comment, the report added.
The item went on to cite people close to the discussions who said Brittain has held meetings with some of Whitbread’s biggest investors over the past few weeks and was confident that she will come out on top. The article added that investors have contacted Ferguson for clarity on his position.
One analyst cited by the report estimated that Costa could sell for up to GBP 2.5bn. Costa contributed GBP 1.2bn of Whitbread’s GBP 31bn group revenues in 2017, the item added.
The report estimated a valuation range of GBP 4bn to GBP 5bn for Whitbread’s properties. Whitbread owns Premier Inn, a UK hotel company.
Whitbread is pressing on with a strategy of international expansion, the report said, noting the company’s announcement on Wednesday, 28 February that it had bought 19 German hotels from Foremost Hospitality.
The deal value was not disclosed. However, the report cited analysts who estimated a sale price of about GBP 250m.

Background:
A report in The Times on 19 January quoted Brittain, who said the Whitbread board was “very open-minded” about splitting its Costa and Premier Inn businesses, but added that the time was not right for such a move.