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NEW YORK CITY-Although both companies deny it, an industry source confirms that Six Continents Plc is indeed in ongoing talks to acquire Starwood Hotels & Resorts Worldwide.

Reports in Britain’s Sunday Telegraph surfaced over the weekend saying that London-based Six Continents, formerly Bass Hotels & Resorts, was readying a $7.6-billion bid for Starwood, a White Plains, NY-based hotel company with roughly 700 properties. It also owns the Sheraton and Westin brands. With some 3,200 hotels worldwide, Six Continents controls the Holiday Inn, Crowne Plaza and Inter-Continental franchises. Spokespersons for both Six Continents and Starwood declined to comment on what they termed rumors and speculation.

However, an industry source tells GlobeSt.com that the two companies have been in sporadic merger talks since last summer. In October, discussions heated up again. Yet the source states that the report in the London paper “was way ahead of the status of the transaction. The discussions have not reached the advanced stage, and may or may not get there.”

Top among the issues yet to be ironed out is, of course, price. The current bid of $26 to $28 a share is unlikely to sway Starwood to merge. An offer of $40 or more would be more pleasing, but that number might be too dilutive to Six Continents.Other issues that would also need to be resolved are who would run such a massive hotel company and how to handle territorial disputes among the various, and very similar brands the combined franchising giant would hold.

After selling its brewery business, Bass Brewers, in 2000, Six Continents has been on the prowl for an acquisition target. At the same time it has its eye on Starwood, Six Continents has also renewed its interest in purchasing the Wyndham hotel chain, according to the industry source.

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