SAN FRANCISCO—Following published reports that locally based Kimpton Hotes & Restaurants had reached out to prospective buyers in recent weeks, InterContinental Hotels Group PLC said Tuesday it had agreed to buy the boutique hotel chain for $430 million in cash. The deal, which is expected to close in the first quarter of 2015, adds another flag to IHG's roster, which also includes Crowne Plaza and Holiday Inn as well as two boutique brands.

For Denham, UK-based IHG, the deal is intended to create a market-leading global presence in the boutique hotel business, currently the fastest growing segment in the industry. In the US, the demand, supply and RevPAR growth for boutique hotels significantly outperforms the overall industry, the company says. Kimpton itself has achieved 4.0% annual growth in system size and 7.7% average growth in comparable same-store RevPAR over the past five years.

IHG sees the portfolio of 62 Kimpton-managed properties in 28 US cities, with 16 more in the pipeline, as highly complementary to its Hotel Indigo and EVEN Hotels brands. The Kimpton deal will bring its portfolio of boutique-style properties to 200 across 19 countries.

For Kimpton, the acquisition by the world's largest hotel operator is seen as a means of achieving greater scale. “Kimpton is a unique business with a strong track record of excellence in everything from design and innovative hotel concepts to financial and operational performance,” says Mike Depatie, Kimpton's CEO. “It also has enormous potential for growth, both in its home market of the US and globally.”

Depatie says IHG is “the ideal partner for Kimpton and has absolutely the right experience and specialist capabilities to help the business move to the next phase of rapid growth.  Kimpton and IHG have many things in common, not least our shared values and approach to building brands.  As an owner of a significant number of Kimpton hotels through our real estate investment funds, I am committed to developing additional Kimpton hotels and I look forward to seeing Kimpton go from strength to strength as part of IHG.”

The Kimpton Real Estate Investment Funds, which are run by Depatie and three other Kimpton executives, expect to make future investments in Kimpton branded hotels.  The funds own approximately 30% of Kimpton's existing and pipeline properties and plan to raise additional funds to acquire, develop and redevelop boutique hotels.