Whitbread shares are soaring as a Costa spin-off looks more likely

Elliott Advisors wants Whitbread to float Costa Coffee in order to raise £3 billion sources say

Leisure business Whitbread (WTB) shot to the top of the FTSE 100 leaderboard in early trading on Monday as another activist investor stake builds.

Whitbread, which has a market value of £7.2 billion, is under pressure after it emerged that Elliott Advisors, an activist NY hedge fund, now owns a 6 per cent stake.

Whitbread's share price rose on Friday, adding 3.31 percent to close at 3,935.00p, outperforming the broader United Kingdom market, with the benchmark FTSE 100 index ending the session 0.09 percent higher at 7,264.56.

"Premier Inn and Costa Coffee are uneasy bed-fellows as there are no material synergies between the businesses and the uncharitable view is that it is not always apparent what value the PLC adds to its constituents", commented analysts at Canaccord Genuity this morning. The company's shares are down almost 5 percent in the past 12 months.

Reuters reported over the weekend that Elliott Advisors how held over six percent in Whitbread, with the move turning the hedge fund into the blue-chip company's biggest shareholder.

United States hedge fund Sachem Head, which as a 3.4% stake in Whitbread, has also advised the management to consider breaking up the business, as well as a sale and leaseback of its Premier Inn properties, said the BBC.

Investors and analysts have long raised the idea that Whitbread should spin off its popular Costa coffee-shop chain.

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