InterContinental Hotels jumped in London trading after the Financial Times reported the company has held early-stage merger talks with Starwood Hotels and Resorts Worldwide. InterContinental, Europe's second-largest publicly traded hotel company and the operator of the InterContinental Dublin (formerly The Four Seasons), gained as much 5.5 per cent.
Starwood, which operates The Westin in Dublin, was little changed in New York trading.
A merger would create a the world’s largest hotel operator, with more than 1 million rooms in 100 countries. The talks are tentative and Starwood may chose a different partner or follow another strategy, the FT reported, citing two people familiar with the discussions.
"We never comment on speculation, and if somebody makes an offer, we're a British company, and we'd consider it," InterContinental chief executive Richard Solomons said in an interview on Bloomberg Television on Thursday.
Mr Solomons made the comments following the company’s first-half earnings release, before the I published its article.
Spokeswomen for both Starwood and InterContinental s declined to comment on the article.
Buying InterContinental, owner of the Holiday Inn and Crowne Plaza brands (also present in Dublin), would expand Starwood's offering of midcale hotels and more than double its hotel rooms in the fast-growing Chinese market. InterContinental operates 722,600 rooms, including 79,000 in China. Starwood, whose brands include the Sheraton and W, has 358,400 rooms.
Starwood in April said it was exploring strategic and financial alternatives to increase shareholder value. That fueled speculation that it may bid for InterContinental, which has been considered an acquisition target for more than a year.
