Whitbread Shares Reflect a Significant Discount: Here’s Why According to Activist Investor Corvex

Whitbread shares jumped 6.3% on Thursday after activist investor Corvex Management disclosed a 6.05% economic interest in the Premier Inn owner and called for a strategic review of the group’s direction and capital allocation. 

The stock is now trading around 2,583p, although it remains down about 12.3% so far this year.

Corvex said it invested in Whitbread because the current share price reflects “a discount to the Company’s fundamental value” and, in its view, even undervalues the group’s fully owned and operated UK freehold hotel portfolio on a standalone basis. 

The investor argued that the market appears to be assigning no value to several other parts of the business, including Whitbread’s UK-operated leasehold estate, its German hotel assets and development properties that are under construction and not yet trading.

Against this backdrop, Corvex called on Whitbread to undertake a strategic review to reassess its capital allocation priorities and overall strategy, particularly following recent changes in the UK Budget affecting rateable values and business rates. 

The activist stated that the review should be supported by an independent, leading financial adviser to ensure a rigorous and objective assessment of all options.

Corvex has not predetermined any specific outcome, but believes the process should be focused on delivering the most attractive long-term, risk-adjusted returns for shareholders. 

It highlighted Whitbread’s current five-year capital plan, which contemplates around £3.5 billion of investment, close to the company’s current market capitalisation.

The investor said it intends to seek board representation and work constructively with Whitbread’s directors and management to maximise value for all shareholders.