Starwood Hotels & Resorts Worldwide Inc., the owner of brands including Westin and Sheraton, dropped the most in nine months after InterContinental Hotels Group Plc said it isn’t in merger talks with the lodging company.

Starwood shares were down 5.2 percent to $78.38 at 3:31 p.m. in New York trading. They fell as much as 6.1 percent earlier Thursday, the biggest intraday decline since Oct. 28.

“Following recent market speculation, the board of directors of IHG states that it is not in talks with Starwood with a view to a combination of the businesses,” InterContinental said in a statement Thursday.

Starwood announced in April that it was exploring strategic options, fueling speculation of a potential merger with a competitor such as Denham, England-based InterContinental, with brands including Holiday Inn and Crowne Plaza brands. The Financial Times reported earlier Thursday that the two sides held early stage talks for a combination. A deal would have created the world’s largest hotel operator, with more than 1 million rooms in 100 countries.

Reuters also reported that Stamford, Connecticut-based Starwood was in talks with Wyndham Worldwide Corp., as well as sovereign wealth funds. Margot Happer, a spokeswoman for Wyndham, declined to comment on the report.

In a conference call with analysts Thursday, Stephen Pettibone, vice president of investor relations for Starwood, said the company’s exploration of options to increase value was “well under way.”

‘No Secret’

“It’s no secret that we have a strategic alternative review in progress,” Pettibone said. “You’re going to see a lot about that in the press. Some of that’s right and some of that’s wrong.”

He wouldn’t comment further on the process or its timeline.

Patrick Scholes, a hotel analyst with SunTrust Robinson Humphrey Inc., said an InterContinental deal was attractive because of the combination of InterContinental’s midscale brands, including Holiday Inn, with Starwood’s luxury Le Meridien and W Hotels brands.

Merging the two companies’ management teams would probably go smoothly too, with Starwood’s chief executive officer serving on an interim basis, Scholes said.

“Starwood doesn’t really have a CEO right now,” Scholes said. “It’s not like you’re going to have two CEOs duking it out.”

This article was written by Chloe Johnson from Bloomberg and was legally licensed through the NewsCred publisher network.

Tags: ihg, starwood
Photo Credit: A room at the Westin Sydney. Starwood Hotels