(Reuters) - Elliott Investment Management said on Tuesday it has built a stake of more than $2.5 billion in U.S. refiner Phillips 66, and plans to push for operational changes as well as the sale of the company's midstream business.

Phillips 66 shares rose 5.8% in morning trade. In March, the activist investor disclosed a $1 billion stake in Phillips 66, following which the company laid out a performance improvement plan to boost shareholder returns and share price.

However, Elliott said Phillips 66's plan "failed to materialize, and it has become evident that urgent changes are needed" and that its shares have lagged that of rival refiners.

On Monday, Reuters reported the investor had build a stake of over $2.5 billion stake in Phillips 66.

Phillips 66 did not immediately respond to a Reuters request for comment regarding Elliott's plans for its midstream business.

"A streamlined Phillips would include the sale or spin-off of the midstream business, the sale of the company's interests in CPChem and the sale of the JET retail operations in Germany and Austria," Elliott said in a statement on Tuesday.

If the company does sell or spin-off its midstream business, it could command a valuation of more than $60 billion, the investor said.

Phillips 66 had a market capitalization of $51.09 billion as of stock's last close, according to LSEG data.

Elliott also stressed that Phillips 66's board needed new independent directors to bolster accountability and conduct a review of management.

The hedge fund added that Phillips 66 must commit itself to ambitious refining targets and prioritize profitability at a time when refining margins have dropped for most U.S. refiners.