Leaked letter hits hotelier for Six

SIX Continents, formerly Bass the brewer, may be forced to rethink its investment strategy after a leaked letter from a major shareholder accused it of squandering money on acquisitions. The affair will cause acute embarrassment not only for SC and its £1.2m-a-year chairman Sir Ian Prosser, but also for pension fund group Hermes.

A letter from Hermes managing director David Pitt-Watson to SC senior non-executive director Roger Carr suggested 'widely-held' concerns over its acquisition policy. Pitt-Watson, whose fund owns 2.3% of SC, offered to arrange a meeting between the company and other fund managers who shared his concern.

On Monday, Pitt-Watson declined to discuss the letter. But he said: 'We are pleased with many of the things Six Continents has done during the two years we have been shareholders. We remain in active dialogue to ensure long-term value.'

His letter used tougher language, expressing concern that the SC board 'may contemplate a significant acquisition which will be value destroying...both Intercontinental and Holiday Inn destroyed huge amounts of shareholder value...this must not happen again.'

The group paid £1.8bn for Intercontinental in 1998, recently adding Posthouse Hotels for £810m. The slowdown in long-haul travel hit luxury chains hard.

The group's move from brewing to hotels and pubs left it with a £3bn war chest. Chief executive Tim Clarke hopes to snap up more hotels when prices ease. SC said: 'We have just held a series of meetings with shareholders. We always listen to their concerns. Any acquisitions are subject to strict financial criteria.' SC shares, down 2p to 740p, have underperformed the market over five years.