US hedge fund Corvex Management has built a stake of just over 6% in Whitbread, and is urging the hotel group to carry out a strategic review of its direction and capital allocation.
Corvex said funds affiliated with the firm held an economic interest in 10,221,246 shares, equivalent to about 6.05% of Whitbread’s issued share capital.
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The investor said the holding reflected its view that Whitbread’s shares were trading at a significant discount to the underlying value of the business, including its UK freehold hotel estate.
In a statement, Corvex said the current share price appeared to attribute no value to parts of the group such as its UK leasehold hotels, its German operation and development sites that are not yet trading.
The fund said recent changes announced in the UK Budget, including adjustments to rateable values and business rates, strengthened the case for a review of the company’s strategy and capital priorities.
Corvex said the review should be supported by an independent financial adviser and should assess the full range of options available to the board, without a predetermined outcome.
It said the board should in particular examine Whitbread’s current five-year capital plan, which it said envisaged around £3.5bn of investment, close to the company’s current market capitalisation.
Corvex said it intended to seek representation on the board and to work “constructively and collaboratively” with directors and management.
Whitbread, which owns the Premier Inn hotel chain, has not yet responded publicly to the announcement.
