Whitbread pressured by activist Sachem Head to consider break-up
Whitbread [LON:WTB], a UK-based multinational hotel, coffee shop and restaurant company, is being pressured by activist Sachem Headto consider a break-up, according to a newswire report.
The report by Reuters, citing people familiar with the situation, confirms the strategy widely expected since Sachem Head disclosed a 3.4% share in the company on 4 December.
Since its inception in 1742 as a regional brewer, Whitbread has developed into a major player in the UK hospitality sector. The group’s main businesses are in two discrete businesses – Costa Coffee and Premier Inn Hotels.
The company has actually been the subject of regular takeover/spin-off speculation even before Sachem Head's disclosed investment. Credit Suisse analysts noted on 11 October that Whitbread had stooped to its lowest valuation in 10 years when compared to the sector, making it vulnerable for an activist campaign with five strategic options as motivation. They suggested that Costa could fetch a GBP 3.4bn valuation on a standalone basis.
Costa Coffee is the second largest coffeehouse chain in the world by the number of outlets and the largest in the UK. Premier Inn, the company’s largest division, is currently the UK's largest hotel brand with over 760 hotels.
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