Whitbread Share Discussion Threads

[bountyhunter] 16/5/2018 11:35

BlackRock have increased to 5.09%

[spacecake] 11/5/2018 11:33

After Costa Coffee has been de-merged would the smaller Premier Inn group reduce the pay of the lead directors in line with the reduced size of the company or will they move on ?

[galatea99] 03/5/2018 10:26

What has this particular management done, exactly, to award themselves £12m more?
Share price stagnant for two years, only moving now because activist investors see the market has no faith in this management to create value for shareholders. Yet this management, already way overpaid in any case, continue to line their pockets at the expense of shareholders. There really needs to be a wholesale cleanout of this lot.

[bountyhunter] 25/4/2018 14:04

yes I agree 2 years is quite ridiculous really, just dragging their heals as they were very likely forced into it as has been widely covered

[galatea99] 25/4/2018 14:00

"LONDON--(BUSINESS WIRE)--Elliott Advisors (UK) Limited (“Elliott”) is pleased that Whitbread has announced a demerger and has committed to doing so “as fast as practical”. In Elliott’s view this should be achieved within six months."

Quite right!

[galatea99] 25/4/2018 12:45

"Whitbread’s Habit of Delaying Is a Hard One to Break: Gadfly"



A CEO with the Theresa May touch.

[jeffian] 25/4/2018 12:28

I don't feel that strongly about it. It's hard to see what synergies there are between the coffee business and the hotels. If value can be extracted by having two separately quoted companies, so be it. My only recent experience was ICAP which split itself into two component parts - NXG and TCAP - and that certainly worked with the shares in the 2 entities being worth considerably more than the old ICAP shares.

[smurfy2001] 25/4/2018 11:02

Possibly one of the silliest decisions i've seen in years. Separating a successful coffee business because of activist pressure what about the thoughts of the 90% shareholders do they not count?


Whitbread to spin off Costa chain as a separate firm

[bountyhunter] 25/4/2018 08:53

latest dividend info added to header

[bountyhunter] 25/4/2018 08:45

yes dragging their heals as is typical of late
...has certainly been a possibility for a while but in my view the iis most likely triggered this at the current time - if they seriously planned to announce it now all along then it wouldn't need potentially 2 years to complete!

[galatea99] 25/4/2018 08:25

24 months for a demerger?
Is Brittain nuts?

[montyhedge] 25/4/2018 08:05

2 years, seem to be dragging their heels on Costa.

[ianood] 25/4/2018 07:52

bounty - I suspect they probably were thus the 2 year lead time to try and get better momentum in to Costa's development programme

[bountyhunter] 25/4/2018 07:39

finally! ...made out they were planning it all along!

[spacecake] 25/4/2018 07:16

It's a big day today - two year process though.

[bountyhunter] 24/4/2018 19:10

could be a big day for Whitbread tomorrow

[spacecake] 23/4/2018 18:49

So, after splitting costa from whitbread would that mean AB packs her case and trots off ?

[galatea99] 23/4/2018 14:40

Article very critical (and very rightly critical) of Alison Brittain:

[bountyhunter] 23/4/2018 09:53

roll on Wednesday! ;-)

[galatea99] 16/4/2018 13:09

More comment:

"ShareCast News) - With 10% of Whitbread shares now in activist investor hands following the emergence of Elliott Advisers, analysts from Credit Suisse, Stifel and Numis offered varying opinions on how much value can come from breaking-up of the Costa Coffee and Premier Inns owner.

Elliott has confirmed that is has amassed a near-6% stake which together with Sachem Head, which revealed its 3%-plus sake in December, means roughly 10% of the shares are held by activists.

Sachem has reportedly been pushing for the separation of the property from the hotel assets, a re-leveraging of the balance sheet, and the separation or sale of Costa, while Elliottt is said to just be pursuing a spin-off of Costa rather than "any other financial engineering".

Whitbread shares were up 6% to 4,180p as midday approached on Monday.

Credit Suisse said it saw a 26% potential upside to 4,950p as the addition of Elliott as the group's largest shareholder "will increase the likelihood of break-up".

The Swiss bank believes there is "much wider shareholder support for change" and that a split of Premier Inn and Costa "makes sense", with the current price "inconsistent" with the long term competitive advantages of each business and a sum-of-the-parts valuation that implies 40% potential upside.

January's update showed that current trading isn't easy, while the combined corporate agenda is "very full", with Costa facing structural challenges from its high street focus and both business striving for material UK space growth, with international aspirations, cost inflation pressures and management's saving plan alongside Costa's wide range of operational initiatives to improve positioning.

If management want to fight the break-up, Credit Suisse said "other levers could be pulled", said CS, noting Whitbread's £5.4bn of freehold property, potential for restructuring the low-return pub restaurant business and for extending the efficiency mindset and the £150m cost saving target.

Morgan Stanley's take was that the while the reported push for a Costa demerger is "likely leading to further speculation" that "should support the shares", as Costa is only 25% of profit/EV, "investors need to believe in more for outsized returns".

A demerger of Costa "could remove the risk the business is sold too cheaply" amid the turnaround and "seems relatively lower risk" versus a disposal of hotel real estate that "risks taking on more expensive long-term leases, losing control of the asset/product, and reducing investment opportunities" or a disposal of the pub restaurants that "risks dis-synergies given nearly all are co-located adjacent to a Premier Inn".

Analysts at Numis noted that the £3bn of extra value perceived by Elliott would be equivalent to 1650p per share or a 3.5x EBITDA for the whole group.

"In our view it is entirely logical that the two businesses be split at some point, as the natural end game to the unpicking of the conglomerate," Numis said, seeing a demerger as easiest to execute although trade sale would clearly crystallise a control premium, with Krispy Kreme and Caribou Coffee owner JAB seen as most likely trade buyer or a range of global consumer companies. "An IPO is unlikely, unless WTB wishes to generate cash for reinvestment such as in Germany."

Broker Stifel noted that "many US investors" view Whitbread in a different light from mainstream UK investors, more as an investment in hotels, property and Costa together with a lightly geared financial structure.

"We consider it is very unlikely that the current management would separate the freehold assets from the hotel business, or move to a more leveraged financial structure. However, it is possible that Costa could be separated from the rest of the group, particularly if an attractive offer arose for that business."

With the current UK consumer outlook and Costa's difficult recent trading, Stifel was "not convinced" that a demerged Costa would attain a higher rating than Whitbread currently does.

"Such a step may, however, be a move towards exploiting value from both parts of the group and would certainly encourage corporate activity. Our sum-of-the-parts valuation is £48.50 per share."

Panmure Gordon noted that CEO Alison Brittain's tone "has become noticeably more conciliatory to shareholder demand, which will make next week's finals interesting" and estimated each turn of Costa EV/EBITDA is worth £235m/130p per share.

"The challenge is why sell now when LFLs are flatling and market is worried about the high st, having rebutted demands to sell over the last 8 years when LFL averaged mid-single digit growth? If CEO Alison Brittain can demonstrate self-help initiatives are working and Costs LFLs inflect in H2 then Costa would be primed for sale.

"The other angle, spinning off property, feels like a non-starter given than i) SLBs would increase operational gearing, ii) the Board consistently advocate benefits of freehold ownership, iii) WTB doesn't really need the cash proceeds."

Over at Canaccord Genuity they said Whitbread was "under-leveraged" with net debt/EBITDA of just 1.1x for FY18E and circa £4bn of freehold assets on the balance sheet but pointed out that the position of the Whitbread pension trustees "potentially adds a complication to any break-up" as the last year end deficit was circa £400m with Whitbread paying £95m per annum in contributions.

For Whitbread's management the opportunity to sell to investors if trying to avoid a break-up, "is to turn interesting international bridgeheads into material growth opportunities for both Premier Inn and Costa Coffee. For Premier Inn the focus is on Germany and for Costa Coffee the focus is China".

In a preview of the full year figures due next Wednesday, Deutsche Bank said Whitbread was "one of the cheapest stocks" in the sector on a rating of circa 14.5 times earnings, even before the emergence of Elliott."

Most seem to see potential uplift of 20%-40%.

[galatea99] 16/4/2018 12:34

Some broker comment referred to in FT Alphaville Markets Live:

[chinese investor] 16/4/2018 08:24

Great Start !

[bountyhunter] 16/4/2018 07:34

highlighted this morning