(Adds background, shares)
By Neil Maidment
LONDON May 29 A shareholder in Intercontinental
Hotels Group urged the hotelier on Thursday to consider
a tie-up with a rival, following media reports that it recently
rebuffed a mystery 6 billion-pound ($10 billion) U.S. takeover
Activist investor Marcato Capital Management, which owns 3.8
percent of IHG, said in a statement the prospect of a merger
with a larger hotel operator would have "compelling strategic
and financial merit" and would reshape the hospitality industry.
"We strongly encourage Intercontinental Hotels Group's board
of directors to explore such a combination and engage advisors
to conduct a formal process to ensure it evaluates the full
range of opportunities available to maximize value," Mick
McGuire, hedge fund manager at Marcato, said.
Last week British media reports said that IHG, which runs
4,700 hotels under brands including Crowne Plaza, Holiday Inn
and InterContinental, met some weeks ago to consider a 6
billion-pound offer but had rejected it on the grounds it was
The company has so far declined to comment.
Analysts have suggested that Starwood Hotels & Resorts
Worldwide Inc, owner of the Sheraton and Westin brands,
could be the U.S. suitor.
However, many analysts have said also pointed out that since
the reported approach occurred IHG has repurchased shares on
several occasions, suggesting it cannot be in any active bid
The firm has also since announced in early May it would
return $750 million to shareholders and was considering selling
off more hotels to boost further cash returns, bolstering its
share price and reducing the bid premium.
Shares in IHG were up 1 percent at 2,327 pence at 1400 GMT,
around 28 percent higher than a year ago and valuing the
business at around 6 billion pounds.
Marcato has recently been involved in activist tussles with
the likes of auction house Sotheby's, where it has urged
the company to return more cash to shareholders and cut costs,
and car parts maker Lear Corp.
($1=0.5986 British Pounds)
(Additional reporting by Li-mei Hoang; Editing by William Hardy
and Greg Mahlich)