When the markets opened this morning and shares in restaurant and hotel conglomerate Whitbread jumped up 18%, there was plenty of disappointment from investors who missed out. But no need to despair, there are abundant tradable opportunities still in play. Let’s look at the facts.

Unless you’ve were holding Whitbread shares before the UK Index opened, it is unlikely that you could directly benefit from the news of Whitbread’s proposed sale of Costa Coffee chain to Coca-Cola for £3.9bn. After gapping up from 4020p Thursday’s closing price to around 4750p (~18% jump) at the open and hitting intraday highs around 4796p, Whitbread shares have hardly been on a tear. In fact, if you purchased the stock right as the bell rang, you’d be net negative by the end of trading session on Friday. When it comes to fast-moving financial markets, you have to act quick and you have to act yesterday.

Live and learn, right? But what’s there to learn? First off, those investors who did their research would have known several months in advance that the Costa de-merger was in the works. Whitbread has been under intense pressure from activist investors like Elliott Advisers who have been clamouring for the company to split off both Costa Coffee and Premier Inn brands to release value. In fact, the company itself announced as such in its full-year results in April, which our research team reported in our daily Morning Report published before the markets open. Did your broker keep you in the loop? If not, perhaps it’s time to get a new broker.

The Costa sale to Coca-Cola is essentially done and dusted. It may still be subject to shareholder approval, but with the activists having hoped that a spin-off Costa would be worth as much as £3bn, it appears that Whitbread management has done even better. So, what’s next? Is Premier Inn the next target for a spin-off or sale? So far, Whitbread has committed itself to keeping its hotel chain in-house, but how long will it be able to withstand pressure from activist investors who have acquired a 10% stake in the company and are pushing for wide-ranging changes.

Whitbread has many years of experience of investing in popular brands and then offloading their stake (TGI Friday’s UK franchise, Premier Lodge, Pizza Hut and Britvic come to mind). If you’ve been salivating over the 18% jump in Whitbread shares today, you need to take the potential of Premier Inn sale seriously. There is no guarantee, of course, but that’s financial markets for you. There are no sure things (as they say in the City, if you want a guarantee, buy a fridge), but you can increase probability of being a successful investor by doing your research and discussing you investment options with your broker.

And if Whitbread is not your cup of tea (of coffee), there are plenty of other takeover discussions that are simmering in the background and worth keeping an eye on. Many of them are high profile, widely covered in the news, like the Fox/Sky/Disney/Comcast Mexican stand-off, or the Shire/Takeda pharmaceutical tie-up.

But others are flying a bit under the radar, like the potential takeover of Standard Chartered by Barclays Bank, as the latter comes under pressure from activist investors. Come to think of it, same thing preceded the Whitbread/Coca-Cola deal. Do you think there might be a pattern?

Whatever happens, it pays to be informed and keep up to date with market news and updates. Out research team at Accendo Markets keeps a continuously updated Mergers & Takeovers database, so you can track all the key M&A developments impacting UK Index shares. We also work daily to keep our clients immediately informed of any news that might impact their trading portfolio and inform them of potential for future tradable opportunities.

Why not take advantage of this service yourself? It’s easy, just sign up here to receive our daily Research & Trade ideas and never miss a tradable opportunity.

James Matthewson, Trader, 31 August 2018