Marcato urges IHG to accept rival merger

A significant shareholder of the InterContinental Hotel Group (IHG), which owns the Crowne Plaza and Holiday Inn brands, has urged the group to consider accepting a merger with a rival company. 

Marcato Capital Management, which owns 4% of IHG shares, has released a letter to its fellow shareholders encouraging them to reach out to the IHG board and call for a strategic review of the business.

IHG reportedly turned down a $10bn (£6bn) offer from an unnamed American rival in May, but Marcato believes a deal would help double the value of the company.

In a statement signed by managing partner Richard McGuire, Marcato said: “Following media reports of a £6bn unsolicited offer that was quickly rebuffed by the board of directors at IHG we grew concerned that the board was not giving due consideration to the strategic alternatives available in the current industry and M&A environment.

“We hoped to engage in a constructive dialogue with the board and IHG’s management regarding a process to explore potential options for enhancing long-term shareholder value.”

The statement went on to say that the “combination with another major hotel operator” could deliver a “premium upwards of 100% over IHG’S current share price, creating a powerful and diversified hotel management company.”

IHG issued a statement in response saying that it had noted the announcement made by Marcato and that it maintains an “active dialogue with all its shareholders and welcomes feedback.”

“The board regularly considers all options for driving shareholder value. IHG met Marcato on 22 September 2014 and 29 October 2014 and reviewed its analysis. Following this review, 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.”