Intercontinental Hotels Group has ruled out a proposal from a minority shareholder that the company should merge with another major hotel firm.
Marcato Capital Management, which currently owns around 4% of IHG, wrote to fellow shareholders yesterday in an attempt to persuade them that the best option for IHG for investors would be a merger.
Marcato’s managing partner Richard McGuire wrote in the letter: “On a standalone basis, IHG will not be able to provide shareholder value comparable to what could be achieved through a combination with another major hotel operator.
“Based on reasonable assumptions, Marcato found that an equity combination could deliver a premium upwards of 100% over IHG's current share price, creating a powerful and diversified hotel management company and further enhancing IHG's value.”
But IHG was quick to dismiss Marcato’s calls for a change in its strategy, although the company said it had analysed Marcato’s case.
“The board has 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,” said IHG in a statement.
The board of IHG reportedly turned down an unsolicited £6 billion takeover bid in May from an unnamed US-based company.
IHG owns brands such as Intercontinental, Crowne Plaza, Holiday Inn and Hotel Indigo.