Marcato Capital Management, a San Francisco-based investment manager that owns approximately 4% of the outstanding shares of IHG, on Tuesday released a letter to IHG shareholders along with a presentation outlining the results of an independent evaluation of various potential strategic alternatives conducted by Houlihan Lokey.
Citing a lack of confidence in IHG’s board of directors, Marcato retained Houlihan Lokey this past August as its financial advisor to evaluate opportunities for enhancing long-term shareholder value at IHG. After receiving this evaluation, Marcato said in a news release, “On a standalone basis, IHG will not be able to provide shareholder value comparable to what could be achieved through a combination with another major hotel operator. In fact, based on reasonable assumptions, Marcato found that an equity combination could deliver a premium upwards of 100% over IHG’s current share price.”
Marcato also encouraged IHG to pursue a merger earlier this year.
“IHG met Marcato on 22 September 2014 and 29 October 2014 and reviewed its analysis,” IHG said in a written statement. “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.”