InterContinental Hotels shareholder seeking strategic options: IHG CEO says board would consider ‘alternative approach'
InterContinental Hotels Group (IHG) chief executive Richard Solomons said the FTSE-100 hotel operator’s board would consider an “alternative approach,” the Financial Times reported.
Solomons’ comment follows news that IHG shareholder Marcato Capital Management has hired advisers to help come up with strategic options for the hotel operator such as selling itself to a US-based rival in a “tax inversion” deal. Marcato holds a stake of about 4% in IHG, the item said.
The article noted that deal speculation has surrounded IHG since May. The article cited people familiar with the matter who said IHG’s listed New Jersey-based rival Wyndham Worldwide Corporation had made an informal approach regarding a possible GBP 6bn (EUR 7.53bn) takeover bid for the UK-based company.
Solomons added that IHG executives have spoken with Marcato, the item continued.
IHG has, however, declined to comment regarding any contact with Wyndham, the article said.
Solomons said IHG has a clear strategy, which it has pursued consistently over the past decade. IHG’s 1HY14 financial results yesterday, 5 August strengthened the case for the company remaining independent, the item said, noting that IHG’s underlying operating profit increased by 6% to USD 301m for the HY to 30 June. IHG also increased its HY dividend by 9%, the article added.
Solomons argued that large hotel companies have no need of mergers and acquisitions to build market share. However, analysts cited by the report predicted that the hotel industry would undergo consolidation. One analysts cited by the report remarked that none of the major hotel operators has a market share exceeding 10%.
A tax inversion strategy based on a deal with IHG would not yield the same cost savings as other similar takeovers, however, as IHG pays tax at a higher rate – 29% - than some other UK-domiciled companies, the report said.
Solomon declined to completely rule out any international deals, adding that scale offers opportunities for deals, the article added.
A report in The Times said Solomons declined to accept Marcato's offer of direct talks regarding merger opportunities.
IHG’s market capitalisation stood at GBP 5.40bn at the close of trading in London yesterday, 5 August.
Source Financial Times, The Times