Shares in France's Accor rallied after Le Figaro newspaper reported that it has examined a potential merger with British rival InterContinental Hotels (IHG) that would create the world's biggest hotel group.
Le Figaro said that no formal approach has been made by Accor to IHG.
Based on current prices, a combined firm could have a market value of approximately $17 billion.
Without citing sources, Le Figaro added that Accor's management board is in favour of a deal, but that Accor chairman and CEO Sebastien Bazin, who had set up an internal taskforce on the matter, is more cautious about moving ahead.
An Accor spokeswoman said that the company does 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 being down by over 43% so far.
Shares in IHG, were are down by approximately 23% this year, were up 0.35% at 0825 GMT on Thursday August 20 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 US rival Marriott by number of hotel rooms, with over 1.6 million between the two.
Geographical Sense
It could also make geographical sense, with Accor and its brands being more skewed towards Europe, while IHG has larger operations in the United States and is also growing fast in Greater China.
News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.
