American hedge fund Marcato Capital Management, is actively pushing for InterContinental Hotels Group (IHG) to agree to a merger or acquisition by a rival hotel company, claiming IHG share prices may double if it agrees to the move as published in an open letter to investors.
The activist investor holds 4% of InterContinental shares and hired an investment bank, Houlihan Lokey to look into IHG before sending the letter to other shareholders yesterday claiming a “combination” would enhance IHG’s values by increasing opportunities for growth and generating “substantial business and financial synergies,” Bloomberg reports.
InterContinental is Europe’s second-largest publically traded hotel operator and Marcato said in its letter it “will not be able to provide shareholder value comparable to what could be achieved through a combination with another major hotel operator”, the paper reported.
According to the report, IHG chief executive officer, Richard Solomons said the hotel company could grow without a merger or takeover and had “served investors well,” the paper quoted from an interview in June.
In a response to Marcato’s letter, Bloomberg reports InterContinental said that following a review of the firm’s analysis, the board “concluded that it remains in the best interests of all its shareholders to continue to pursue its current strategy for high-quality growth and delivering strong operational and financial performance.”