Will Accor and IHG merge to form the world’s biggest hotel chain?

Will Accor and IHG merge to form the world’s biggest hotel chain?

According to Reuters, shares in France’s Accor rallied on Thursday after Le Figaro newspaper reported it had examined a potential merger with British rival InterContinental Hotels (IHG) that would create the world’s biggest hotel group.

Le Figaro said no formal approach had been made by Accor, which is behind brands such as Ibis and Movenpick, to IHG, which owns Holiday Inn and Crowne Plaza. Based on current prices, a combined firm could have a market value of about $17 billion.

Without citing sources, it added Accor’s management board was in favour of a deal, but Accor chairman and CEO Sebastien Bazin, who had set up an internal taskforce on the matter, was more cautious about moving ahead.

An Accor spokeswoman said the company did not comment on market rumours. IHG declined to comment.

Accor shares were up 1.9%. The company, which faces higher interest payments after it was downgraded to junk status by ratings agency S&P Global earlier this week, has been punished by investors this year, with its shares down over 43% so far.

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Shares in IHG, down around 23% this year, were up 0.35% at 0825 GMT after surging as much as 3.1% in early trading, outperforming a falling FTSE-100 index.

A marriage between the two firms would propel them far ahead of U.S. rival Marriott by number of hotel rooms, with over 1.6 million between the two.

It could also make geographical sense, with Accor and its brands more skewed towards Europe, while IHG has larger operations in the United States and is also growing fast in Greater China.

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