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Chinese Investors Rumored to Be Interested in IHG Takeover

International Hotels Group is being eyed as the next big hotelier slated for industry consolidation.

Three Chinese investors are looking at British company International Hotels Group (IHG) just weeks after rival Marriott International, Inc. said it would buy Starwood Hotels & Resorts.

London’s The Telegraph reported Monday that Shanghai Jin Jiang International Hotels Group, airlines holding company HNA Group, and sovereign wealth fund China Investment Group are turning their interest to IHG after they missed their opportunity to buy Starwood.

No offers have been made to IHG, The Telegraph reported.

On Nov. 16, FlyerTalk reported that Marriott International, Inc. announced it would buy Starwood Hotels & Resorts Worldwide, Inc. to create the world’s largest hotel company for an estimated $12.2 billion in a combined stock-swap and cash transaction. The merged companies will have 1.1 million hotel rooms in over 5,500 hotels in 100 countries. They will operate under 30 brand names including Marriott’s The Ritz-Carlton, Bvlgari, JW Marriott, Renaissance Hotels, Marriott Hotels, Courtyard, Residence Inn, and Fairfield Inn & Suites, and Starwood brands St. Regis, The Luxury Collection, W, Westin, Le Méridien and Sheraton, among others. The deal is expected to close mid-2016.

“Chinese bidders are thought to be sizing up the FTSE 100 hotels giant behind the Holiday Inn chain,” The Telegraph reported. “City sources believe that InterContinental Hotels Group (IHG) has been left vulnerable after its rival Starwood Hotels & Resorts Worldwide agreed to be bought by Marriott earlier this month.”

The paper noted that hotel industry is fragmented and ripe for consolidation – and the Starwood deal is expected to further consolidation in the hotel industry.

“IHG, which runs more than 4,900 hotels with almost 730,000 rooms, would be an attractive target for a Chinese bidder,” according to The Telegraph. “It has substantial operations in almost 100 countries across the U.S., Europe, and Asia, including a managed business in Greater China. The company, one of the world’s biggest hoteliers, is valued at about £5.8bn.”

Shanghai Jin Jiang International Hotels Group Company Limited is a Chinese hotel operator and manager of over 795 landmark, luxury, commercial and budget hotels. The company oversees 116,000 rooms in four Chinese municipalities in 133 cities in 27 provinces.

China’s HNA Group owns and operates a fleet of 561 aircraft that fly to over 210 cities around the world, with an annual passenger traffic volume of 68.22 million. The group operates under brand names Hainan Airlines, Tianjin Airlines, Deer Jet, Lucky Air, Capital Airlines, West Air, Fuzhou Airlines, Urumqi Air, Yangtze River Express, MyCARGO, Africa World Airlines, Aigle Azur and other airline companies.

Beijing’s China Investment Corporation (CIC) is a wholly China-state-owned company incorporated with registered capital of $200 billion. The company’s purpose is to diversify China’s foreign exchange holdings and seek maximum returns within acceptable risk.

[Photo: Getty]

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Z
zyxlsy December 1, 2015

If the company is running fine, I seriously wonder why it would sell itself just for some money. Chinese are not stupid buyers who spend way over market value to gain some publicity any more. They won't spend $20b for IHG, so why sell it over just some more money? Chinese are not good at running top brands. Just go to a Jin Jiang Hotel (they bear five-star marque in China, issued by the government standard), and you'll notice they are not well organized. And good luck finding a Chinese equivalent of Ambassador Program here in China. So in conclusion, to both Chinese firms and IHG's current management, don't ruin IHG.