Tax inversions may be coming to the hotel industry.
The practice, wherein a firm buys a foreign company so as to move its tax domicile, has been derided by President Barack Obama as unpatriotic, but that has not stopped a wave of U.S. companies from fleeing to less taxed countries. Now, The Wall Street Journal reports that activist hedge fund Marcato Capital Management has hired a bank to “drum up interest” from American hotels that might buy Britain’s InterContinental Hotels Group.
Marcato Capital said it owns a 4 percent stake in the hotel chain, the Journalreported, and has already asked InterContinental to explore a deal. With the hiring of the Houlihan Lokey investment bank, Marcato Capital is “trying to ramp up the pressure,” according to people familiar with the matter, theJournal said.
A spokeswoman for InterContinental declined to comment, the newspaper said.
In a recent interview with CNBC, Obama said that it is not fair for companies to “game the system” by moving tax bases after benefiting from the American corporate environment.
“You are an American company. You continue to benefit in all kinds of ways from being an American company,” the president said. “It is true that there are a lot of things that may be legal that probably aren’t the right thing to do by the country.”