Beleaguered investors in troubled tours and insurance business Saga got a rare boost on Wednesday when it emerged activist investor Elliott is targeting the company.
A filing to the stock market reveals that the US investor, which has assets of $35 billion (£28 billion), has grabbed 5% of the shares.
Elliott has a reputation as a tough player, having forced shake-ups in numerous UK boardrooms.
Last year it successfully pushed for the break-up of Whitbread, which sold Costa Coffee to Coca-Cola. It also had a stake in GKN, later sold to Melrose.
Saga has been in the mire lately, issuing a profit warning in April and admitting it would have to slash prices on insurance products. Chief executive Lance Batchelor has led the company since a 2014 float, but plans to step down in January.
Saga said: “We have good and open relations with all of our shareholders and expect to be in contact with Elliott shortly.”
Other investors are likely to welcome the arrival of the US shake-up kings.
The shares floated at 185p but have had a bad run. They plummeted in April when Batchelor unveiled a new pricing scheme that would reward loyal customers.
The shares fell nearly 40%. Today they were up 5% to 45p, leaving the company valued at £505 million.
Batchelor said in a recent interview: “I’m sure shareholders must feel frustrated by the share price fall, and I sympathise.
“But there is something fundamentally flawed about any industry that doesn’t reward loyalty.” Saga is focused on the over-50s and has towards three million customers.
Elliott could push for asset sales or a spin-off of the travel arm, as well as demanding a say in the appointment of the next CEO.
Russ Mould, investment director at AJ Bell, said: “Saga has a valuable brand. It has already announced changes to how its insurance business works and so Elliott would need a convincing argument to push for further change.
“However, the activist may have a way of better exploiting Saga’s position in capitalising on the older generation’s increasing desire to travel.”
Research by Lazard reveals activist investors spent £5.7 billion on shares in UK companies in the past year.
Elliott launched 22 campaigns across the world last year.