After Six Continents, now Thistle Hotels gets a hostile takeover bid too

Thistle Hotels has rejected a £555m takeover bid from its biggest shareholder, the Singaporean investment company BIL International, as "opportunistic". Shares in Thistle rose 3 per cent to 122p on speculation that BIL's move would flush out other bidders.

BIL, which has a 46 per cent stake in Thistle, admitted it had failed to convince the board to back its 115p-per-share offer, but said it was still hopeful of winning over the directors. BIL intends to retain Thistle's £367m net cash pile as well as the final dividend of 3.4p per share.

David Newbigging, Thistle's chairman, said the offer was at a "wholly inadequate premium." He added: "It totally fails to recognise the underlying value of Thistle."

It emerged yesterday that BIL, which has two representatives on Thistle's board, had been responsible for the hotel group's failure to return its net cash to shareholders. "The views of BIL were highly influential in the decision to retain this cash within the company," Thistle said, adding that it was looking at ways to maximise shareholder value.

Arun Amarsi, BIL's chief executive, said Thistle, which was floated by BIL in 1996, had "not performed to expectations ... In good times it lagged other hotels. As a listed vehicle it is not working." To avoid a conflict of interest, Mr Amarsi and Tan Sri Quek Leng Chan, BIL's chairman, who both sit on Thistle's board, have not been involved in any discussions about the offer.

Analysts said the bid was at a huge discount to the group's net asset value of 211p per share. "It's not a serious offer. It's an insult to Thistle shareholders," Mark Abramson, at Bear Stearns, said.

William Claxton-Smith, at Insight Investments, which has a 4 per cent stake, said he would back Thistle. Another top 10 investor called the move, which came one day after Hugh Osmond launched a £5.6bn hostile bid for Six Continents, a wake up call for hotel groups. "It is about getting the bidding going. [This] is a redrawing of the map in the hotel sector."

Thistle, which is being advised by Merrill Lynch, denied that Mr Newbigging's position on the bank's board heralded a possible conflict of interest. "Merrill, which handled Thistle's float, was appointed after a full beauty parade," a source said.