SAN FRANCISCO—Activist shareholder Marcato Capital Management, headquartered here, is urging Intercontinental Hotels Group to explore a merger with a rival. The investment manager on Thursday issued a statement following published reports that UK-based IHG, the world’s largest hotelier with seven brands and 4,700 properties, had rejected an unsolicited $10.1-billion takeover offer.

A statement attributed to Mick McGuire, Marcato’s founder and managing partner, says that while the veracity of the published reports cannot be determined, Marcato believes that an IHG combination with a larger hotel operator would have “compelling strategic and financial merit,” representing “a unique opportunity to reshape the global hospitality industry.” McGuire, whose firm owns approximately 3.8% of IHG’s outstanding shares, says Marcato strongly encourages IHG’s board “to explore such a combination.”

The bidder’s identity is not known, although Sky News reported last week that possible suitors included Starwood Hotels & Resorts or Starwood Capital Group. Likely the bid came from the US, “with US hotel operators understood to be enticed by the prospect of moving their tax domicile to the UK in a process known as a tax inversion,” according to Sky News.

IHG’s board was said to have considered the offer a few weeks ago but rejected it as too low. The owner of the Crowne Plaza, Holiday Inn and Staybridge Suites brands has a market capitalization of approximately $9.4 billion.

Citing unnamed sources, Sky News said the company was braced for other offers to come in, but also suggested that interest in a takeover could fade within a few weeks. A spokeswoman for IHG did not respond to’s request for comment by deadline early Thursday afternoon.