Corporate raider checks in with IHG

Nelson Peltz, the investor who loves to sweat better results out of managers, has bought into InterContinental Hotels

For the record, Nelson Peltz denies the story about the "topless tennis". A 1988 book about that decade's notorious corporate raiders recounted how Mr Peltz and his friend Saul Steinberg once had four women play a topless doubles tennis match in which they were the only spectators. The story lingers, despite his protestations now, because it is of a piece with an opulent lifestyle that includes some of the most luxurious playthings, the biggest homes and the longest trail of Hollywood girlfriends that you find among business moguls.

Before settling down with his third wife, a former model and mother to most of his 10 children, Mr Peltz was romantically linked to the actresses Victoria Principal and Diana Rigg, and a string of lesser starlets.

As he himself indelicately put it: "In the Seventies I did women. That's better than doing guys."

But if the column inches have focused on his lifestyle, British investors got a taste yesterday of Mr Peltz's real impact, when shares in the hotels group InterContinental Hotels (IHG) soared on the news that he has turned up on the share register. Investors need only glance at his record of shaking up companies to imagine that he has his sights on harassing IHG's management, too, and if he gets results it could mean big benefits for every shareholder.

His company, Trian Fund Management, has taken a 4.27 per cent stake in IHG, it was revealed yesterday, and while the FTSE 100 ended lower, IHG shares closed up 6.1 per cent at 1,526p.

Investors are betting with Mr Peltz that he has found another of his favourite targets: a company sitting on hugely valuable brands, but whose operational management of their assets have not been up to snuff.

These days, the New York-born billionaire accentuates the differences between himself and those old corporate raiders and their modern counterparts, the private equity firms. Not for him, debt-based, financial re-engineering to turn a quick profit; his style is to sweat the managers. He calls it "operational activism".

UK investors have had a taste of this before, and Britain has been the scene of some of Mr Peltz's biggest triumphs – as well as one of his darkest moments.

When he turned up on the shareholder register at Cadbury Schweppes in 2007, it was at a time when the chocolates and drinks maker was under pressure to split itself apart, pressure that Mr Peltz had decided to lead.

Within two days, the company announced just such a plan to shed its drinks business, clearing the way – ultimately – for a takeover by another Peltz investment, Kraft.

Cadbury was already no stranger to Mr Peltz because it bought Snapple from him, netting him the biggest fortune of his career. The fruit drinks business had been languishing until another of his investment vehicles, Triac, bought it for $300m (£195m) in 1997, completely revitalised the marketing of the brand and then sold it to its British buyer in 2000 for $1.45bn.

Mr Peltz is 70 later this month, but shows no sign of easing up on a relentless pace of work he has pursued since a very young age, when he dropped out of business school to drive trucks for his family's food delivery business. A few years later he sold the business for $8m, and got the taste for buying and selling companies.

He has driven his own children just as hard as they have grown up.

Between school and homework and relentless ice hockey practice, overseen by Mr Peltz himself on the ice hockey rink in the garden of their mansion, "my kids are exhausted every day", he once told an interviewer from Fortune magazine. "I keep them that way. It's gym, ice, homework. They're too tired to get in trouble. And I don't want them to see me walking off with a bag of golf clubs over my shoulder. If they see me work hard, it's better than a lecture."

It is nearly three decades now since Mr Peltz emerged with junk bond funding as the owner of the largest packaging firm in the US, assembled from the acquisition of tin can manufacturers around the country.

His interests have spanned numerous industries. He was briefly chairman of a UK-listed property company, Mountleigh, until being censured by the London Stock Exchange for selling shares before announcing disappointing results.

His campaign for efficiencies at Heinz, in which he berated executives for everything from the bad design of ketchup packets to inefficient operations, was blamed for the closure of that company's HP Sauce factory in Birmingham. He still sits on the Heinz board and is a director of Wendy's, the burger chain.

So what might be his plans for IHG? News of Trian's interest stoked the takeover speculation that is already swirling over the company, which owns the Holiday Inn, Crowne Plaza and InterContinental chains.

A combination of IHG and Marriott, for example, would create the world's biggest hotelier with almost 10 per cent of all the hotel rooms in the world. IHG's plan to become the biggest player in China is also seen as particularly attractive to Marriott.

Meanwhile, Blackstone Group, the private equity firm, is also on the prowl to expand its hotel empire, which it began with the acquisition of Hilton Hotels in 2007. Just last week, it bolted on Accor's US budget hotel business in a $1.9bn takeover deal.

Earlier this week, a City analyst floated the notion that IHG could already be in Marriott's sights.

In a note to his clients, Wyn Ellis of Numis Securities said: "Consolidation is inevitable at some stage. IHG, trading at an apparently perpetual discount to its US peers, looks like a possible consolidatee."

It seems Mr Peltz may agree.

Timeline: Evolution of InterContinental

1952 Kemmons Wilson opens the first Holiday Inn hotel, in Memphis, after being irritated by the lack of decent, affordable hotels on a family road trip to Washington DC.

1988 British brewer Bass buys the chain's international business, then the US operation two years later.

1994 Bass launches the Crowne Plaza brand.

1998 It buys InterContinental Hotels.

2000 Bass changes the name to Six Continents.

2002 Demerger of brewing business from hotels creates Mitchells & Butlers and IHG.

2004 IHG chief executive Richard North fired by new chairman David Webster. Replaced by Andy Coslett.

2012 Mr Coslett leaves to be replaced by Richard Solomons.

Start your day with The Independent, sign up for daily news emails
A boy holds a chick during the Russian National Agricultural Exhibition Golden Autumn 2014 in Moscow on October 9, 2014.
Life and Style
love + sex
Ashley Young celebrates the winner for Manchester United against Newcastle
footballNewcastle v United 1 player ratings
Arts and Entertainment
Victoria Wood, Kayvan Novak, Alexa Chung, Chris Moyles
tvReview: No soggy bottoms, but plenty of other baking disasters on The Great Comic Relief Bake Off
Ashley Young celebrates the winner for Manchester United against Newcastle
footballNewcastle 0 Man United 1: Last minute strike seals precious victory
Life and Style
Tikka Masala has been overtaken by Jalfrezi as the nation's most popular curry
food + drink
Arts and Entertainment
Seth Rogan is one of America’s most famous pot smokers
filmAmy Pascal resigned after her personal emails were leaked following a cyber-attack sparked by the actor's film The Interview
Benjamin Netanyahu and his cartoon bomb – the Israeli PM shows his ‘evidence’
ebooksA special investigation by Andy McSmith
Arts and Entertainment
80s trailblazer: comedian Tracey Ullman
Life and Style
A statue of the Flemish geographer Gerard Kremer, Geradus Mercator (1512 - 1594) which was unveiled at the Geographical Congree at Anvers. He was the first person to use the word atlas to describe a book of maps.
techThe 16th century cartographer created the atlas
Arts and Entertainment
Stephen Tompkinson is back as DCI Banks
tvReview: Episode one of the new series played it safe, but at least this drama has a winning formula
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Graduate Application Support Analyst

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Reach Volunteering: External Finance Trustee Needed!

Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...

Christine McCleave: FP&A Analyst

£36,000 - £40,000: Christine McCleave: Are you looking for a new opportunity a...

Recruitment Genius: Sales Executive - OTE £40,000

£15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...

Day In a Page

War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

Baghdad fights to win back Tikrit from Isis – but then what?

Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable
Living with Alzheimer's: What is it really like to be diagnosed with early-onset dementia?

What is it like to live with Alzheimer's?

Depicting early-onset Alzheimer's, the film 'Still Alice' had a profound effect on Joy Watson, who lives with the illness. She tells Kate Hilpern how she's coped with the diagnosis
The Internet of Things: Meet the British salesman who gave real-world items a virtual life

Setting in motion the Internet of Things

British salesman Kevin Ashton gave real-world items a virtual life
Election 2015: Latest polling reveals Tories and Labour on course to win the same number of seats - with the SNP holding the balance of power

Election 2015: A dead heat between Mr Bean and Dick Dastardly!

Lord Ashcroft reveals latest polling – and which character voters associate with each leader
Audiences queue up for 'true stories told live' as cult competition The Moth goes global

Cult competition The Moth goes global

The non-profit 'slam storytelling' competition was founded in 1997 by the novelist George Dawes Green and has seen Malcolm Gladwell, Salman Rushdie and Molly Ringwald all take their turn at the mic
Pakistani women come out fighting: A hard-hitting play focuses on female Muslim boxers

Pakistani women come out fighting

Hard-hitting new play 'No Guts, No Heart, No Glory' focuses on female Muslim boxers
Leonora Carrington transcended her stolid background to become an avant garde star

Surreal deal: Leonora Carrington

The artist transcended her stolid background to become an avant garde star
LGBT History Month: Pupils discuss topics from Sappho to same-sex marriage

Education: LGBT History Month

Pupils have been discussing topics from Sappho to same-sex marriage
11 best gel eyeliners

Go bold this season: 11 best gel eyeliners

Use an ink pot eyeliner to go bold on the eyes with this season's feline flicked winged liner
Cricket World Cup 2015: Tournament runs riot to make the event more hit than miss...

Cricket World Cup runs riot to make the event more hit than miss...

The tournament has reached its halfway mark and scores of 300 and amazing catches abound. One thing never changes, though – everyone loves beating England
Katarina Johnson-Thompson: Heptathlete ready to jump at first major title

Katarina Johnson-Thompson: Ready to jump at first major title

After her 2014 was ruined by injury, 21-year-old Briton is leading pentathlete going into this week’s European Indoors. Now she intends to turn form into gold
Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot