The FTSE 100 company’s market value took off on Monday after the activist investor, Elliott Advisors, confirmed over the weekend that it had become Whitbread’s largest shareholder with a 6% stake.
According to Reuters, it is the second US-based hedge fund to have taken a significant stake in recent months on hopes they can urge Whitbread to demerge the coffee shop division from the rest of the business.
A source, said by the news agency to have knowledge of Elliott’s thinking, estimated the separate businesses would have a total market value of about £10bn from the current figure of about £7.2bn – an increase of 38%.
Whitbread declined to comment but its chief executive, Alison Brittain, told investors in January she was “entirely open-minded” on such a possibility.
The other activist investor to urge a split at Whitbread, Sachem Head, holds a stake of almost 3.4%.
The 275-year-old company has sold off its brewing business and some pubs in past years to focus mainly on Costa, as well as Premier Inn hotels, the Beefeater restaurant brand and the Brewers Fayre pub restaurant chain.
It has been reporting more challenging trading conditions this year for its core brands as the UK economy – its main market – stutters amid Brexit uncertainty.
Whitbread is due to update the market on its annual results next week.