New York City-based activist shareholder Corvex Management has urged publicly listed British hotel firm Whitbread PLC to rethink its strategy of adding value to its holdings, which include the Premier Inn hotel chain.
Corvex Management announced its affiliated funds acquired approximately 10.2 million share equivalents in Whitbread, representing about 6.05% of the British hospitality company.
“[Corvex] believe [Whitbread's] Board of Directors should review the Company’s current five-year capital plan, which contemplates approximately £3.5 billion ($4.68 billion) of investment—an amount approaching the Company’s current market capitalisation,” Corvex said in a news release.
Whitbread’s investor webpage states the market capitalization of the Dunstable, England-based company is approximately £4.13 billion.
Corvex’s statement hints there is a gap between Whitbread’s share price and market value. Corvex added it is now seeking a representation on the Whitbread board of directors, adding, “in our view, the current share price appears to ascribe no value to several meaningful components of the Company’s business, including its U.K. operated leasehold portfolio, its German hotel assets, and its development properties currently under construction and not yet trading.”
Following the news, Whitbread’s share price increased Thursday by approximately 6% from Wednesday's closing price.
Bloomberg reports Whitbread’s shares had rallied by “as much as 4.5%, [Dec. 18’s] biggest gainer in the FTSE 100.”
On Thursday, Whitbread acknowledged Corvex's share purchase in its investor pages but has not released a statement on Corvex's request. When asked for comment, a Whitbread official forwarded an email from CoStar News Hotels to Whitbread's investor relations team.
Another reason Whitbread officials should reevaluate the company is due to changes in U.K. government policy, Corvex said.
“Following the recently announced U.K. Budget and changes to ratable values and business rates, we believe [Whitbread] should undertake a strategic review to assess its capital allocation priorities and overall strategic direction,” Corvex's statement said.
Back on Nov. 28, Whitbread responded to the U.K. government's budget statement and gave new guidance.
“We expect the [budget’s] changes to business rates will take effect in full-year 2027. Our preliminary estimate is that there will be an impact of between £40 million and £50 million," the company said in a news release. "We now expect gross U.K. cost inflation (including business rates) to be between 7% and 8% on our £1.7 billion U.K. cost base. However, with accelerated efficiencies of £60 million, net U.K. cost inflation is now expected to be between 3.5% and 4.5%."