Whitbread share price jumps as activist investor stake puts Costa breakup on the table

 
Alys Key
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Costa is seen by some as a candidate for a possible spin-off (Source: Getty)

Shares in Whitbread jumped more than seven per cent this afternoon after a notable activist investor revealed a three per cent stake in the company.

Sachem Head Capital Management, which has previously pushed for the breakup of FTSE 100 biotech group Shire, today revealed a 3.4 per cent stake in Whitbread, the owner of Costa Coffee and Premier Inn.

Suggestions that Costa Coffee, which is the largest coffee chain in the UK and is growing internationally, should be spun off from Whitbread have been repeatedly raised over the past two years.

Analysts at Credit Suisse noted the idea again in October. But Neil Wilson from ETX capital said at the same time that international growth "might keep any talk of a breakup quiet for the time being".

However the revelation that Sachem, which is headed by founder Scott Ferguson, holds contracts for difference over 6.2m shares in Whitbread has now put the possibility back on the table.

Whitbread also faced a share slump this year after analysts suggested that the coffee to go market was reaching the end of its growth opportunities.

At time of writing shares were up 6.7 per cent at 3,958p, after jumping to as much as 3,965p earlier in the day.

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