By Mark Kleinman, City Editor
The owner of the Ramada hotel chain was the mystery suitor behind a recent £6bn takeover offer for the FTSE-100 hospitality provider InterContinental Hotels Group (IHG), Sky News can reveal.
Wyndham Worldwide Corporation, which is the world's biggest hotel operator with 7,500 sites, made a preliminary offer to acquire IHG in a deal that would have united leading industry brands such as Holiday Inn, Travelodge, Knights Inn and Crowne Plaza.
Sources said this weekend that Wyndham's initial approach to combine with IHG, which was made earlier this year, had been rebuffed and was no longer live, but suggested that it could subsequently be revived.
Wyndham is understood to have been examining a merger with IHG as a means of pursuing a so-called inversion, under which its tax domicile would have switched to the UK to take advantage of favourable corporate tax rates.
Such deals have become an important driver of trans-Atlantic mergers and acquisitions activity.
Pfizer recently failed with an attempt to buy its British rival AstraZeneca for roughly £70bn after provoking a hostile reaction from its target and Westminster politicians, who were angered that the offer was partly predicated upon tax benefits.
This week, Shire, a London-listed and Irish-headquartered pharmaceuticals group, rejected a £26bn offer from AbbVie, a US-based company which wants to use a deal to relocate its tax base.
Inversion have also sparked anger in the US, with several leading politicians vowing to pursue legislative measures to prevent American companies relocating overseas.
It is unclear how Wyndham, which has a market value of $9.5bn (£5.6bn) and is the world's biggest hotel group by number of properties, was proposing to structure an offer for IHG, which is valued at just under £6bn.
Sky News revealed in May that IHG's board had met to consider an approach from an unnamed suitor but rejected it on the grounds that it was too low.
The report prompted a shareholder in the UK-based group, Marcato Capital Management, to call for IHG to examine merger opportunities.
"We believe that a combination with a larger hotel operator would have compelling strategic and financial merit and represents a unique opportunity to reshape the global hospitality industry," it said.
"We strongly encourage InterContinental Hotels Group's board of directors to explore such a combination and engage advisers to conduct a formal process to ensure it evaluates the full range of opportunities available to maximise value."
Since then, IHG's management has shown little appetite to heed the request. Sources close to the company pointed to its recent strong performance as evidence that it had no need to seek a suitor.
The British group is chaired by Patrick Cescau, a former boss of Unilever, and run by Richard Solomons, who has pleased investors with a series of large capital returns.
These have been generated by the sale of many of its flagship hotel properties, including most recently sites in San Francisco and New York, as IHG shifts its business model to hotel management rather than ownership.
IHG still owns the LeGrand Paris and InterContinental Hong Kong, but is also expected to sell these properties and return hundreds of millions of pounds more to shareholders.
It has also been accelerating the expansion of its pipeline of new hotels, with 237 locations opened last year and 444 more added to its roster of future openings.
The company operates about 5% of the world's hotel rooms but has more than twice that volume of the industry's known slate of new rooms.
Last year, IHG reported pre-tax profits of £600m, a 10% rise on the previous year.
Its future growth will be driven by emerging markets, with Hualuxe, a premium brand aimed at Chinese customers, launched in 2012.
IHG declined to comment while Wyndham was unavailable.
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