Six Continents plays down demerger talk

Six Continents has played down reports that its shareholders want it to demerge its hotel and pub divisions because they are losing confidence in the group's strategy.

A spokeswoman said: "Our hotel and retail businesses sit happily side by side. There are synergies between the two in terms of management and operational skills."

However, Jon Lake, corporate finance manager at Deloitte & Touche, said it had remained unclear what would happen to Six Continents' pub estate since talks of a proposed merger with Scottish & Newcastle broke down earlier this summer.

Chief executive Tim Clarke is thought to favour a demerger, while chairman Ian Prosser is reportedly against a split.

Six Continents operates 3,200 Holiday Inn, Express by Holiday Inn, Inter-Continental, and Crowne Plaza hotels in 100 countries. Its property is estimated to be worth more than the company's £5.1b market value.

Six Continents has a cash pile of £3b from the sale of its brewing and unbranded pub assets in 2000. It wants to buy more hotels but, according to Lake, there is nothing suitable on the market.

Another analyst said the Compass-owned Travelodge chain, currently on the market, could be converted to Six Continents' Express by Holiday Inn brand, but the Little Chef restaurants included in a sale would be unattractive to the group.

The Six Continents spokeswoman said if nothing was found by December, it would begin to return the money to shareholders.

by Ben Walker
Source: Caterer & Hotelkeeper magazine, 22-28 August 2002