Premier Inn owner Whitbread has hit out at the activist investor seeking a seat on its board, claiming its proposals would be a “complete waste” of time and money.
The FTSE 100 hospitality firm wrote to shareholders on Tuesday urging them to reject the plans put forward by Corvex Asset Management, one of the group’s biggest shareholders.
Corvex has accused Whitbread of “chronic misallocation of capital” and a misguided “commitment to the status quo”. The investor has called for a “rigorous, fact-based review” of the company’s strategy.
But the Premier Inn owner hit back at the investor, claiming its recent company review resulted in “a significant evolution of Whitbread’s strategy and establishes clear and measurable commitments”.
“The board believes that duplicating the business and strategic review which has only just finished would be a complete waste of company – and shareholder – resources,” it told shareholders.
“It would also destroy the momentum we are seeing and delay and compromise the delivery of value that the Five-Year Plan is on course to create.”
Whitbread also criticised Corvex for changing its demands of the company. In May, the investor called for the group to put itself up for sale, but has more recently said it has “no pre-determined agenda” for the company’s future.
“We want to work with the board in a collegiate and non-adversarial way, as one member among many, bringing a direct shareholder perspective to these decisions,” Corvex managing partner Keith Meister said.
Whitbread takes £178m hit
Whitbread has called a general meeting on 9 November, where investors will vote on whether to appoint Corvex’s James Gemmel to the group’s board. Whitbread has urged investors to vote against this proposal.
The hospitality group revealed on Tuesday that it had taken a £178m hit to profit from its turnaround plan, which saw it sell off all of its restaurants and shed nearly 4,000 staff. The charge dragged pre-tax profit to £109m in the 12 months to the end of August, down 62 per cent on last year.
Whitbread said its new strategy is gaining pace, pointing to 4.5 per cent accommodation sales growth in the UK and Ireland and £39m in cost savings.
Chief executive Dominic Paul said: “With excellent strategic progress and strong current trading momentum, our plan is working.
“Against this positive backdrop, the Board strongly recommends that all shareholders vote against the resolution proposed by Corvex at the forthcoming shareholder meeting.”