July 19, 2019 / 11:07 AM / a month ago

Activist hedge fund Elliott discloses stake in UK's Whitbread

(Reuters) - Premier Inn owner Whitbread (WTB.L) said on Friday activist investor Elliott Capital Advisors [ECAL.UL] disclosed a stake of below 5% in the company.

The Sunday Telegraph reported in May that Elliott had become increasingly frustrated with Whitbread’s strategy of owning Premier Inn hotels outright and wants the company to offload chunks of its property portfolio.

According to the report, the activist investor believes Whitbread’s strategy is “depressing” the company’s share price and is leaving it open to a cut-price hostile takeover.

The company declined to comment further on Elliott's stake purchase, disclosed in a filing here

Last August, Whitbread agreed to sell its almost 4,000 Costa coffee shops to Coca-Cola Co (KO.N) for $5.1 billion after pressure from hedge funds, including Elliott, which said the coffee chain was held back by being grouped with the Premier Inn hotel chain.

Whitbread, which has been focusing on the hotel business after the sale of its Costa Coffee chain, reported lower room revenue last month as companies cut back on business travel.

New York-based Elliott, with assets under management of about $35 billion, has a history of building up minority stakes in takeover targets with a view to securing an improved bid.

Elliott, Paul Singer’s hedge fund, committed $3.4 billion in new capital in the first six months of 2019, data compiled by Lazard shows, outpacing Carl Icahn who spent $2.8 billion.

Shares in Whitbread were 0.16% lower at 4,877 pence at 1034 GMT after moving sharply lower on news of the stake.

Reporting by Noor Zainab Hussain and Tanishaa Nadkar in Bengaluru; Editing by Shailesh Kuber

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