Investors rally against Six Continents

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Six Continents should stop wasting money on over-priced deals and return cash to investors, according to a leading fund manager.Hermes, the vocal and...

Six Continents should stop wasting money on over-priced deals and return cash to investors, according to a leading fund manager.

Hermes, the vocal and activist pension fund manager, has accused the company, formerly known as Bass, of wasting huge amounts of shareholder value.

It has called a meeting of the biggest investors in Six Continents to rally support for its campaign against the hotel and pub company over its track-record.

Investors believe the company paid too much for Holiday Inns in a two-stage acquisition nearly 10 years ago, and again for Inter-Continental Hotels, which it bought in 1998 for £1.8bn.

They are concerned that Six Continents share price has under-performed the FTSE all-share index by as much as 50 per cent during the past five years.

Ten days ago the company was heavily criticised by analysts in London and New York over fears it was about to squander a further £2-3bn on an ill-advised acquisition.

Hermes, one of the biggest active pension fund managers in the UK, wrote to the company last week, demanding investors fears should be addressed by the board.

It is believed that Hermes has since written to other big shareholders including Merrill Lynch Investment Managers, which owns three per cent in Six Continents, to arrange a meeting.

Legal & General, which holds 2.7 per cent, Standard Life, with 2.1 per cent, and Deutsche Asset Management, 1.8 per cent, are all thought to have been approached by Hermes.

Six Continents said it had listened to concerns from investors. A spokesman for the company has said it would hand back more than £1bn to investors if it could not find a deal within 18 months.

The company was renamed after it sold its brewing business to Interbrew in 2000. It is believed to be sitting on a cash-pile of as much as £4bn, largely generated from disposals.

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