Pressure mounts on Whitbread to spin off Costa Coffee

Pressure was on Monday brewing for Premier Inn owner Whitbread to spin off its Costa Coffee arm, as the City cheered an activist US hedge fund becoming the leisure giant’s largest shareholder.

Shares in FTSE 100 firm Whitbread jumped 255p, or more than 6%, to 4190p on its first day of trading since Elliott Advisors, run by Wall Street billionaire Paul Singer, revealed at the weekend it had built up a 6% stake worth £430 million.

Elliott is understood to think the firm will be more attractive if Costa Coffee is demerged, a view shared by US hedge fund Sachem Head.

Credit Suisse analyst Tim Ramskill said the bank also believes “there is much wider shareholder support for change”.

Whitbread, which will next week report results for the year to February, declined to comment.

Its shares have largely been flat over the past 12 months amid weaker consumer confidence on the High Street.