InterContinental Hotels Group (IHG) Approached By American Bidder - Reports

InterContinental Hotels Group (NYSE: IHG) is on watch today following reports over the weekend from Sky News that the company may have rejected a takeover bid from an unnamed American bidder. The bid was said to be rejected three weeks ago and the company has picked up its stock repurchasing effort since the bid, suggesting it is not in an active dialogue with the suitor.

Still, analysts at Nomura are not dismissing the reports outright. "... given the recent pickup in M&A activity across the market and
the fragmentation of the hotel sector, the reports cannot be totally dismissed," Nomura analyst Tim Barrett said.

A Sunday Times article suggested the buyer was motivated by tax domicile to the UK. Barrett believes this is unlikely to be the sole rationale given that two-thirds of IHG’s profits derive from its Americas division. The analyst sees clear synergies from scale, particularly as IHG has only a c.6% share of the global system, despite being the market leader.

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