Whitbread Faces Strategic Calls from US Activist Investor Amid UK Budget Changes
Corvex, a New York-based hedge fund and the second-largest shareholder in Whitbread with a 6.05% stake, is urging the FTSE 100 company to conduct a strategic review and grant it a seat on the board. The hedge fund argues that Whitbread’s UK leasehold properties, German hotels, and ongoing construction projects are undervalued, and calls for a reassessment of capital allocation and strategic direction.
This push comes after the UK government's autumn budget introduced changes to rateable values and business rates set to take effect next year. Whitbread had previously warned that these budget changes would cost the company £40m-£50m in the next financial year. Analysis by Bernstein estimates that rate increases could reduce Whitbread’s pre-tax profits by up to £30m in the first year, £90m in the second year, and £140m in the third year, with a median rateable value rise of around 174% as per sample data.
Whitbread, which owns Premier Inn, Beefeater, and Brewers Fayre, confirms that it has a clear strategy focusing on growth in the UK and Germany. It is exploring options to drive profits, margins, and returns in light of the budget measures. The company’s existing five-year capital plan involves about £3.5bn in investment, which Corvex calls to be reviewed.
On news of the activist investor’s demands, Whitbread's shares rose as much as 6% in early trading but remain down over 10% for the year to date.
