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Increasing growth opportunities through expanding the scope and scale of the business;
Generating substantial business and financial synergies; and
Producing long-term pro forma earnings accretion and share price appreciation.
Most importantly, in the event of a transaction, IHGs shareholders would likely maintain meaningful
ownership of any combined entity, therefore enabling us to participate in the long-term upside of the
larger, stronger company.
To ensure the Board and IHGs management are acting responsibly and in the interests of all IHG
shareholders, we feel compelled to share the analysis*. The presentation is available at
www.IHGvaluecreation.com.
As the analysis highlights, this is a unique and ideal time for IHG to consider strategic alternatives the
hospitality industry and M&A environment are both strong, interest rates are at record-lows, there are
substantial revenue and expense synergy opportunities, and we believe there is likely to be interest from
several potential strategic partners.
It is important to note that we believe it would be highly unlikely for another major industry player to
commit the time and resources necessary to put forth a combination proposal without a sense that it will
be seriously considered and evaluated by IHG.
Ultimately, IHGs Board has an ongoing duty to consider whether the Companys current business plan is
likely to create as much or more value than can be created through a combination with another major
hotel operator. Our analysis demonstrates that a combination could result in immediate, significant, and
abiding shareholder value -- much more than is likely to be created under IHGs current business plan.
The bottom line: The opportunities created by todays favorable market conditions may not be available
in the future. Therefore, we urge the Board to immediately embark on a full review of strategic
alternatives, including engaging with synergistic partners, before this window of opportunity closes.
Sincerely,
Richard T. McGuire
Managing Partner
Marcato Capital Management LP
*For regulatory reasons this presentation is only available to certain categories of IHG shareholders.
Houlihan Lokey is acting for Marcato Capital Management LP and no one else in connection with the
matters referred to above and will not be responsible to anyone other than Marcato Capital Management
LP for providing protections afforded to clients of Houlihan Lokey or for providing advice in relation
thereto.
The information, beliefs and/or opinions in this document, and the letter and presentation to which it
refers, are provided for information only. Nothing in those documents is, or should be construed as,
investment advice or as a recommendation, invitation or inducement to engage in any investment activity,
and should not be used as the basis for any investment decision. Any information, beliefs, and/or
opinions provided in those documents are given as of the date of each document respectively, and are
subject to change without notice. Marcato Capital Management LP does not accept responsibility or
liability (in the absence of fraud) for any errors in or omissions from the information, beliefs, and/or
opinions included in those documents.