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LONDON-Speculation is circulating in the City that InterContinental Hotel Group could dispose of key brands leaving it focused on Holiday Inn.

The rumours were given added impetus when analysts at Merrill Lynch tipped the stock as ‘buy’ and estimated the sale of InterContinental and Crowne Plaza brands could raise £2.5 billion ($4 billion).

The proposal is more radical than the asset restructuring plans the board is currently considering, but Merrill analyst Andrew Burnett thinks such a sell-off would be a quick and clean way to release capital, cut debt and return cash to shareholders. The research note by Burnett agrees such a sale or IPO spin-off might not generate the same returns as a property disposal programme in which the group would retain management contracts on sites sold. But he adds that a site-by-site sale could be difficult to achieve.

Intercontinental has had a tough year since its spin-off from the old Six Continents in April. A month later the hotel group announced profits down 30% because of the Iraqi War and SARS. The board used the opportunity to announce job cuts and a review of its property portfolio.

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