InterContinental Hotels brushes off takeover speculation

 

The chief executive of InterContinental Hotels Group has brushed off speculation about a £6 billion takeover approach, insisting that the company can grow under its own management.

A major investor in the FTSE 100 hotels giant, hedge fund Marcato Capital Management, last week urged InterContinental to consider a tie-up with a rival, rather than fall prey to a foreign bid — the £6 billion offer came from an unnamed US suitor.

But chief executive Richard Solomons asserted that the group, which also owns the Crowne Plaza chain, could grow under its own management, adding that its  $10 billion (£5.96 billion) market capitalisation had returned “a ton” of value to shareholders.

“We have a huge organic pipeline,” Solomons told Bloomberg. “What’s nice about this position is, there is no necessity to do deals.

“Today, we’ve got some big companies and the new supply  is predominantly from those few  big players. We’ve all got  great opportunities.

“We compete with each other but there is no necessity for deals to happen,” he added.

Possible bidders for InterContinental were named as Starwood Hotels & Resorts, the owner of the Le Meridien, and specialist investment funds such as Starwood Capital.

InterContinental’s attraction to US firms is that moving their domicile to Britain would help them save billions in tax, which was one of the key reasons behind drugmaking giant Pfizer’s ultimately unsuccessful approach to AstraZeneca.

Investors have backed Solomons’ strategy of focusing on managing hotels rather than owning them. InterContinental is currently returning £445 million to shareholders, funded by the sale of unwanted hotels, such as its 80 per cent stake in the New York Barclay.

But the hotels group is expanding in emerging markets, including China, Russia and India.

“We grow the business and continue to grow it through brand expansion and by introducing our brands to new markets,” Solomons said. “We’ve done deals. We’ve launched brands. Ultimately, IHG has created a ton of value and returned a ton of shareholder value.”

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