InterContinental Hotels Group Plc rose to a record in London trading after Starwood Hotels & Resorts Worldwide Inc. said it’s exploring strategic and financial alternatives to increase shareholder value, fueling speculation it may bid for InterContinental.
InterContinental, owner of the Holiday Inn and Crowne Plaza brands, rose as much as 5.8 percent to 2,967 pence, the highest since the shares first traded in 2003. In November, activist investor Marcato Capital Management urged InterContinental to merge with another “major hotel operator.”
Starwood said in a statement on Wednesday that it hired Lazard to advise the company to review “a full range of strategic and financial alternatives.”
“The logic for a tie-up between IHG and Starwood is quite clear,” said Wyn Ellis, an analyst at Numis Securities with a hold rating on InterContinental. “It would be a neat fit in terms of brand profile and geographic coverage.”
A spokeswoman for InterContinental declined to comment. A spokesman for Starwood Hotels didn’t immediately respond to a request for a comment.
Starwood Hotels, whose chief executive officer Frits van Paasschen resigned in February amid slow growth, owns high-end hotel chains such as W and St. Regis. InterContinental, which is focused on the mid-scale segment, would make a good addition for Starwood, Ellis said. Buying InterContinental would also help Starwood gain better access to China, where InterContinental has more than 240 hotels, he said.
On April 21, U.K. newspapers reported that InterContinental may be taken over by a U.S. suitor.