“Activist” investor Elliott Capital Advisors has taken a 5.1% stake in Saga, just weeks after chief executive Lance Batchelor announced he would stand down in January.
The move, disclosed by Saga in a trading update on Wednesday (17 July), has sparked speculation in the consumer press Elliott could push to break up the historic travel group.
In a statement, cited by The Times, a Saga spokesperson said: “We have good and open relations with all our shareholders and expect to be in contact with Elliott shortly.”
Elliott’s interest follows a tough period for Saga; the over-50s specialist issued a profit warning on 4 April, sending its share price plummeting 40% in a single day. The group’s shares are currently trading at just shy of 50p, less than half their £1.04 valuation at the start of the year, although Elliott’s intervention did drive Saga shares up 4.18p (9.4%).
Saga was forced to disclose further financial unease in June, reporting tour operating revenue down 4% year-on-year. “Conditions in the travel market are very competitive and affected by current political uncertainties,” said Saga.
“The group’s tour operations business is not immune to such pressures, with booked revenues for the full year down 4% as of 15 June when compared to the same period last year. In addition, margins for this year will be impacted by competitive discounting.”
Elliott, now Saga’s fifth largest shareholder, has a long history of disrupting the market. Earlier this year, it reportedly urged Premier Inn owner Whitbread to further break up its portfolio following its sale of Costa Coffee to Coca-Cola last year.
The Times reports Elliott wants Saga to undertake a strategic review of its entire business. Elliott is yet to comment.
It has been a busy year for Saga with the launch of the first of new-build ships Spirit of Discovery, with Spirit of Adventure to follow next year.
The company said in June its cruise bookings had been “more resilient” and are expected to his “target booking levels” for 2019 departures.
Batchelor will depart his role in January following six years at the helm of Saga. A search for his successor is under way.
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