Six Continents' war of words hots up
Six Continents has hit back at Hugh Osmond's criticism of the company, accusing the former PizzaExpress founder of trying to acquire the company "on the cheap" by discrediting the proposed aims of the merger.
The board expressed "extreme concern" about the rumoured hostile takeover, saying it was the worst time for a change of control, as this was the "weakest business environment in the history of the modern hotel industry".
The company has also announced that its break-up would lead to bigger benefits than originally expected - an additional $35m (£22.1m) of annual cost savings in InterContinental Hotel Group (IHG), up from the estimate it made last week of $65m (£41.2m). Details of where the savings will be made have yet to emerge, but the company has already stated there would be a "significant reduction in head count".
Details of the cost savings are emerging as the group attempts to boost its defences against predators, the main one being Osmond and CMI, the Alternative Investment Market-quoted vehicle he is using to make the bid. This week Osmond branded Six Continents poorly run and about to lose £100m in the proposed carve-up of the company. He said the demerger proposals, which would see the company's hotels and pubs divisions separated, have failed to deliver full value to shareholders.
"Six Continents wants shareholders to continue backing the same management that has already destroyed shareholder value. In return, this management intends doing nothing it couldn't have done long ago. Shareholders deserve better and they deserve it now," said Osmond.
Despite the war of words, Osmond has approached Six Continents to discuss his bid, worth more than £7b, in an effort to avoid it going hostile. His overtures are expected to be rebuffed by the board, however, which said it is going ahead with the merger as planned.
The company's pubs sector is thought to be Osmond's primary interest; he has approached several hotel groups as potential operating partners should his bid prove successful.
Speculation has also revolved around several "white knight" bids from hotel groups Hilton, Marriott and Starwood and US private equity groups Kohberg, Kravis, Roberts and Blackstone. A Hilton spokesman declined to comment on whether the group intends to make a bid.
An analyst said the war of words was reminiscent of Osmond's battle with Whitbread for Allied Domecq's 3,500 pub estate in 1999. "I think the exchange of robust views between Six Continents and Osmond could be the start of a similar campaign as we go further down this line. This story is set to drag out for some time as people begin to throw their hat into the ring."
By Helen Adkins
