Investor Corvex urges sale of Premier Inn-owner Whitbread, threatens board shake-up
Corvex Management Pressures Whitbread for Strategic Changes
May 18 (Reuters) - U.S. activist investor Corvex Management on Monday called on Premier Inn owner Whitbread to pursue a sale and said it would nominate new directors to the board if the hotel operator refused to act, citing share underperformance and a gap in valuation.
Corvex's Stake and Previous Demands
The fund holds roughly 6.1% of Whitbread, according to LSEG data, and in December it urged the group to review its capital strategy, citing a valuation gap after last year's British budget changes saddled the country's biggest hotel operator with higher costs.
Call for Immediate Sale Process
"It is imperative that [Whitbread] immediately retains an independent investment bank and makes a public commitment to conduct a rigorous and comprehensive sale process," Corvex founder and Managing Partner Keith Meister said on Monday.
Demands for Cost Controls and Shareholder Returns
Meister, a protege of Carl Icahn, in a letter called out Whitbread's "lack of engagement" and demanded it suspend all non-essential spending and leaseback deals while a sale process is underway. He also urged the company to return cash to shareholders through buybacks.
Whitbread's Response and Strategic Initiatives
"Whitbread is focused on driving stronger returns for all our shareholders," a company spokesperson said in a statement, highlighting the company's five-year strategy to cut costs.
Whitbread shares were flat at 2,302 pence at 0845 GMT. They have lost 18% of their value over the last 12 months.
Recent Company Announcements
In April, the company warned of 3,800 job cuts during its full-year results and said it would shut its 197 remaining branded restaurants and start selling more meals at its hotels.
It also plans to sell 1.5 billion pounds ($2 billion) worth of freehold property to fund growth and reduce net capital expenditures, making it a majority leaseholder for the first time since the Premier Inn chain was founded in 1987.
Corvex's Criticism of Whitbread's Plan
Corvex criticised the new plan in its letter on Monday and called it "value-destructive."
Reporting Credits
(Reporting by Yamini Kalia and Tuhina in Bengaluru; Editing by Rashmi Aich and Thomas Derpinghaus)
