Merger rumors drive up international brand stocks

Yesterday, rumors began spreading about a pending $31+ billion luxury international hotel brands merger, driving up stock prices of several companies.

Shares of US group Starwood Hotel & Resorts Worldwide—which owns Le Meridien, St Regis and Westin brands—improved to $84.30 as speculation increased that it would soon be climbing into bed with Holiday Inn and Crowne Plaza Group Intercontinental, 11 pence better at 2700 pence, in a ‘friendly’ deal that would value the US stock at around $110 a share.

In April, Starwood Hotels hired investment bank Lazard to ‘explore a full range of strategic and finance alternatives to increase shareholder value.’ Analysts said at the time it could lead to the company putting itself up for sale or to merge with a rival.

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IHG has always been seen as the likeliest merger partner. US hedge fund and shareholder Marcato Capital Management reportedly implored the IHG board to consider merging with a rival.

Intercontinental’s shares jumped 80 pence recently following the £604 million sale of its luxury flagship hotel in Hong Kong to a consortium. The £450 million profit sparked speculation of a bumper cash or special dividend return to shareholders. City sources now suggest the sale was part of a plan to help fund a merger or audacious bid for the bigger Starwood Hotel & Resorts Group.

 

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For reservations currently on the books, group ADR is up while transient ADR is down, according to TravelClick data.