viewIntercontinental Hotels

IHG investors shrug off reports that Accor likes merger idea

Accor created a team to examine the possibility of a tie-up earlier in the summer, according to reports in France

Intercontinental Hotels -

InterContinental Hotels Group PLC (LON:IHG) investors shrugged off reports that French hotel chain Accor is still mulling a potential merger with its London-listed rival.

Accor created a team to examine the possibility of a tie-up earlier in the summer, French newspaper Le Figaro reported overnight, with investment banks Centerview and Rothschild hired.

Any merger would result in the creation of the world's largest hotel operator, overtaking US chain Marriott International.

IHG shares rose 3% in early trade but by late-morning were pretty much flat at 4,006p, down 23% since the start of the year.

This is likely to be because the Figaro article says while the board is in favour of a deal, boss Sebastien Bazin is playing it safe for now and has not pursued the matter with IHG's (French) chairman Patrick Cescau.

Broker Bernstein noted that IHG's shares troughed at £21 earlier this year “and at that price there may have been merit, but we struggle to see the merits at >£40”.

Analysts added: "At current size neither company materially underperforms the market leader Marriott on unit growth, showing that they have enough targeted scale. Given growth in the asset light hotel model is free (funded by third parties), M&A should only be undertaken if it enhances this growth, it is hard to see that an IHG/Accor merger would meaningfully accelerate growth."

  --Adds broker comment--

Quick facts: Intercontinental Hotels

Price: 5026 GBX

Market: LSE
Market Cap: £9.21 billion

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