Investor Corvex urges sale of Premier Inn-owner Whitbread, threatens board shake-up

* US-based Corvex ​holds about ⁠7% of Whitbread

* Fund criticises property sale plan, urges ​payouts to investors

* Whitbread defends new five-year strategy

May 18 (Reuters) - U.S. activist investor Corvex Management called on Premier Inn owner Whitbread to pursue ​a ‌sale on Monday and said it would nominate new directors to the board if the group refused to act, citing ⁠share underperformance and a gap in valuation. Corvex holds roughly 7% of ⁠the British group, according to a letter ​by founder and Managing Partner Keith Meister. In December, it urged Whitbread to review its capital strategy, after last year's British budget changes saddled the country's biggest hotel operator with higher costs.

"It is imperative that (Whitbread) immediately retains an independent ​investment bank ‌and makes a public commitment to conduct a rigorous and comprehensive sale process," Meister said in the letter on Monday.

Meister, a protege of Carl Icahn, called out Whitbread's "lack of engagement" and demanded it suspend non-essential spending and leaseback deals while a sale process is underway. He also asked for shareholder returns via buybacks. "Whitbread is focused ​on driving stronger returns for all our shareholders," a company spokesperson said in a statement, highlighting progress around its ‌new five-year strategy aimed at driving growth from reshaping the business.

"We have made good progress on our transformation to date, and this new plan will go ‌further and faster to deliver for our shareholders."

Whitbread shares were up marginally at 2,318 pence at 1254 GMT. They have lost 18% of their value over the last 12 months.

BUSINESS SHIFTS

"I don't believe (Whitbread) will be forced ​to comply (with Corvex's requests) but they will come under increasing pressure to address the share price weakness," Shore Capital analyst Gregory Johnson said, ‌adding that Whitbread will need more aggressive disposals and faster execution to satisfy the fund.

In April, Whitbread laid out plans to sell 1.5 billion pounds ($2 billion) worth of freehold property to fund growth and cut net capital expenditure, ⁠making it ⁠a majority leaseholder for the first time since the Premier Inn chain was founded ‌in 1987.

It also warned that 3,800 jobs would be cut as it sought to manage costs by shutting its 197 remaining branded ​restaurants and selling more meals ​at its hotels.

Corvex criticised Whitbread's new plan on Monday, calling it "value-destructive".

AlphaValue analyst ‌Yi Zhong said a formal sale process at Whitbread would likely attract private-equity and real estate interest.

However, she said "any prospective acquirer would need to weigh these asset-backed opportunities against increasingly challenging external operating conditions".

Whitbread