LONDON (Reuters) - Activist investor Sachem Head has asked Whitbread WTB.L to consider a break up of its Costa Coffee chain from its hotels and restaurant businesses, two people familiar with the matter told Reuters.

Coffee pours into a cup at a branch of Costa Coffee near Manchester, Britain May 5, 2017. REUTERS/Phil Noble

The U.S. hedge fund disclosed a 3.4 percent stake in FTSE 100-listed Whitbread last month, sending the Premier Inn-owner’s shares up more than 7 percent on the day amid speculation the activist would push to split up the company.

Sachem Head wants Whitbread’s management team, led by chief executive Alison Brittain, to examine a break-up as a way to boost the value of its individual businesses, the people said. The company’s current market capitalization is about 7.2 billion pounds.

Spokesmen for Whitbread and Sachem Head declined to comment.

The hedge fund is reviving an idea long mooted by investors and analysts that Whitbread should spin off its popular Costa chain.

Founded 276 years ago as a brewery by Samuel Whitbread and Godfrey and Thomas Shewell, Whitbread is one of Britain’s oldest companies that grew into a sprawling business with a pub estate and restaurants, as well as its Costa chain and beer operations.

It has become more streamlined in the past few years, however, selling off its brewing business and some pubs to focus mainly on Premier Inn, Costa, the Beefeater restaurant brand and the Brewers Fayre pub restaurant chain.

Activist investors often buy stakes in companies to push them to consider break-ups or asset sales to increase value for investors.

RBR Capital Advisors last year called on Swiss bank Credit Suisse to spin off its asset management operations and investment bank. Mining group BHP Billiton BHP.AXBLT.L is exiting its U.S. shale oil and gas unit following calls from hedge fund Elliott for an overhaul.

Sachem Head has around $4 billion in assets under management and was set up in 2013 by Scott Ferguson, who previously worked with billionaire activist Bill Ackman at his Pershing Square Capital Management hedge fund.

Unlike more aggressive activists like Elliott, Sachem Head only occasionally pushes for change at the companies where it invests. One of its most notable activist campaigns to date has been at U.S. design software maker Autodesk, where Ferguson had a board seat until last year.

Analysts at Barclays said in a note dated Jan. 3 that the “most ‘obvious’ step” for Whitbread would be to sell Costa, should its boss Brittain, who took the helm in December 2015, decide to restructure the company. Whitbread said last October that it had more than 2,300 Costa stores in the UK, and it also has almost 7,000 Costa Express machines.

Sachem Head’s investment comes at a difficult time for Whitbread.

Shares in the business, which is due to issue a quarterly trading update on Thursday, have fallen 8 percent since the Brexit vote in June 2016, amid worries Britain’s impending exit will dent consumer confidence.

On Oct. 24, Whitbread posted a sharp slowdown in revenue growth at Premier Inn, disappointing expectations that it might have benefited from sterling’s weakness following the Brexit vote.

Investors had hoped that the fall in the pound would have encouraged more Britons to take domestic holidays and foreign tourists to visit the UK, where Premier Inn had about more than 70,100 rooms last year.

However, Whitbread reported a 1.8 percent increase in UK revenue per available room in the six months to the end of August 2017, which was lower than investors had expected. Costa’s UK revenue climbed 8.3 percent to 542 million pounds in the same period.

Whitbread shares closed down 2.3 percent.