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The swift sale of Whitbread’s Costa Coffee highlights the impact these investors can have
Thursday 06 Sep 2018 Author: Lisa-Marie Janes

The surprise sale of Whitbread’s (WTB) Costa Coffee business to Coca-Cola for £3.9bn on 31 August is sparking a debate over who could be next to buckle under the influence of activist investors.

For the activist funds with stakes in Whitbread, Sachem Head and Elliott, the deal is a victory, helping to achieve their aim of generating more value by splitting up the Costa Coffee business from Premier Inn.

A planned demerger was expected to take up until April 2020, but the process has effectively been accelerated by a generous offer from Coca-Cola for Costa.

Whitbread is not the only company that has been targeted as Barclays (BARC), Smith & Nephew (SN.), Premier Foods (PFD) and De La Rue (DLAR) also have activists on their share register.

‘Firms where share price performance has been weak, operational performance sub-optimal relative to peers or the business structure is complex could come under greater scrutiny,’ comments AJ Bell investment director Russ Mould.


Banknote manufacturer De La Rue is under significant pressure from investment trust Crystal Amber, which believes the company is vulnerable to a takeover.

Over the last year, shares in De La Rue have drifted 26% lower to 472p following a profit warning and its failure to win the UK’s post-Brexit passport contract.

It has been a difficult year for Premier Foods and chief executive Gavin Darby narrowly managed to keep his job following pressure from hedge fund Oasis Management to speed up turnaround plans.

One of the solutions being touted is to sell the Batchelors noodles brand.

Despite a volatile ride, shares in Premier Foods have barely moved at 41.8p since September 2017.


Mould believes other well-known names could be in activist's cross hairs, flagging shopping centres owner Intu Properties (INTU) and pet products retailer Pets at Home (PETS).

Both companies have struggled with sharp share price declines.

Intu’s merger with rival Hammerson (HMSO) was abandoned earlier this year amid investor unrest from the latter, while a challenging retailer property market has weighed on performance.

Pets at Home is working to fix its business after competition concerns and weak consumer confidence have dragged its share price close to an all-time low at 115.2p (3 Sep).

B&Q owner Kingfisher (KGF) is another possible target as its turnaround plan has yet to make its mark half way into its five year duration. (LMJ)

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