INVESTORS bought into the idea of Intercontinental Hotels Group (IHG) as a takeover target yesterday, following news that prominent activist investor Nelson Peltz has a 4.27 per cent stake in the firm.
Shares in IHG jumped 6.1 per cent after US hedge fund impresario Peltz declared his stake through Trian Fund Management.
In recent months, billionaire investor Peltz has revealed stakes in companies ranging from PepsiCo to Heinz and Ingersoll Rand in an effort to push for changes. In some cases, Trian has sold its investment soon after, as happened with Pepsi.
There has been growing talk recently that IHG could eventually be taken over, intensified by the emergence of the noted activist investor.
Wyn Ellis at Numis said earlier in the week that “consolidation is inevitable at some stage” for the hotel industry.
He told City A.M. yesterday: “Obviously I do not know what Peltz’s motivation for acquiring a stake in IHG is, but he has a track record as an activist investor. On fundamentals, IHG is an extremely attractive stock.
“If and when consolidation happens in the hotel sector, it will be a perfect target for a number of potential bidders – with Marriott the first among them.”
Panmure Gordon analyst Simon French said: “The company’s strategy has been pretty successfully executed, and the shares are close to an all-time high.
“It’s hard to see what the obvious move is, besides industry consolidation, though even that is not necessarily sensible at this stage in the cycle.”