In response to a letter sent by Marcato Capital Management (which owns 4 per cent of IHG’s shares) to the rest of the group’s shareholders, the hotel firm said it welcomed feedback, but would continue to pursue its current strategy.
“IHG maintains an active dialogue with all its shareholders and welcomes the feedback it receives. 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,” a statement from the group said.
Lack of confidence
Earlier yesterday, San Francisco-based Marcato released a presentation outlining the results of an independent evaluation of potential strategic alternative, and urged shareholders to review it and reach out to the UHG board to ask the firm to reconsider its current strategy.
“Following media reports of a £6bn unsolicited offer that was quickly rebuffed by the board of directors of 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. However, IHG has dismissed our suggestions and it appears they have neither solicited offers nor performed the rigorous analysis necessary to evaluate potential options to achieve this goal,” the letter said.
Marcato added that it was its ‘lack of confidence’ in the board’s conduct that led it to approach Houlihan Lokey in August 2014 to do a strategic review.
Equity combination
After receiving the review, Marcato concluded IHG would ‘not be able to provide shareholder value comparable to what could be achieved through a combination with another major hotel operator’.
“Based on reasonable assumptions, Marcato found that an equity combination could deliver a premium upwards of 100 per cent over IHG's current share price, creating a powerful and diversified hotel management company and further enhancing IHG's value,” the letter continued.
The unsolicited bid mentioned in the letter originally came from a ‘secret’ investor, but Sky News later named it as Wyndham Worldwide, ranked the world’s fourth-largest hotel group at the start of 2014.
The £6bn bid was reportedly rejected by IHG for being too low. IHG declined to comment further.