Whitbread shares soar as Premier Inn spin-off looks increasingly likely

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A unit of US activist hedge fund Elliott Management said it now held the largest stake in Whitbread Plc (WTB.L), making it the second activist in recent months to draw attention to Britain's biggest hotel and coffee-shop operator.

"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. Having bought into the company almost a year ago, the hedge fund's stake was reported by The Sunday Times to be worth about £430 million now.

Elliott Advisors confirmed at the weekend that it now holds a stake of more than 6% in Whitbread.

That sparked a near 7% jump in Whitbread's share price on Monday to £41.97, the highest the stock has been in almost a year.

According to reports, Elliott Advisors wants Whitbread to be split into its Costa Coffee chain and its Premier Inn business.

Analyst Alpesh Patel told the Today programme Elliott wanted two separate companies so they can value hotels alongside competitors, such as Hilton, and Costa alongside rivals like Greggs. The company's shares are down almost 5 percent in the past 12 months.

It is also pressing BHP Billiton to get rid of the mining giant's dual listing structure.