The NH board, which classified the bid as "unsolicited," said in a statement to Spain's market regulator that it would refrain from officially rejecting the bid until regulators in Madrid and Amsterdam approve the Hoteles Hesperia offer. Dutch approval is necessary because NH Hoteles has a strong presence in the Netherlands due to its acquisition of the hotel chain Krasnapolsky in April 2000.

The May 22 offer by the much smaller Hesperia represents just a 2% premium over NH's six-month average price. Many analysts believe Hesperia must raise its price significantly to become the company's largest shareholder. NH's biggest investor, Chase Nominees Ltd., holds an 8.9% stake.

NH posted a quarterly loss earlier this month and has seen its stock price crumble to nearly half of what it was last year. NH's stock closed at €8.50 per share on Monday, above Hesperia's €8.30 per share offer.

Despite speculation that the offer could be a prelude to a full takeover, Hesperia has not mentioned a full merger. Even so, NH addressed the issue in its statement.

"Any offer whose objective — declared or hidden — is to assume control of the company should be extended to the total of its capital," the board said. When asked whether NH would be open to negotiating more handsome terms, an NH spokeswoman declined to comment, deferring to the company's statement.

The NH board, which classified the bid as "unsolicited," said in a statement to Spain's market regulator that it would refrain from officially rejecting the bid until regulators in Madrid and Amsterdam approve the Hoteles Hesperia offer. Dutch approval is necessary because NH Hoteles has a strong presence in the Netherlands due to its acquisition of the hotel chain Krasnapolsky in April 2000.

The May 22 offer by the much smaller Hesperia represents just a 2% premium over NH's six-month average price. Many analysts believe Hesperia must raise its price significantly to become the company's largest shareholder. NH's biggest investor, Chase Nominees Ltd., holds an 8.9% stake.

NH posted a quarterly loss earlier this month and has seen its stock price crumble to nearly half of what it was last year. NH's stock closed at €8.50 per share on Monday, above Hesperia's €8.30 per share offer.

Despite speculation that the offer could be a prelude to a full takeover, Hesperia has not mentioned a full merger. Even so, NH addressed the issue in its statement.

"Any offer whose objective — declared or hidden — is to assume control of the company should be extended to the total of its capital," the board said. When asked whether NH would be open to negotiating more handsome terms, an NH spokeswoman declined to comment, deferring to the company's statement.