Leisure group De Vere is considering a move to join the race for the £500m-rated budget hotel chain Premier Lodge, it emerged today.
De Vere confirmed it had been talking to investment group Sun Capital with a view to joining forces to purchase the operation from pub company Spirit.
Earlier this month Sun Capital was one of four bidders to make it through to the second round of the auction.
Others thought to be in the running include Whitbread and private equity group Apax Partners.
Warrington, Cheshire-based De Vere used to own Premier Lodge but sold it to Scottish & Newcastle in 1999.
It was then a much smaller operation with 69 sites. Premier Lodge is now the UK’s third largest budget hotel brand, with 140 lodges nationwide. Most have a fully-licensed pub restaurant, which would substantially continue to be owned by the vendor.
In a statement confirming its interest, De Vere said it believed the budget hotel sector would continue to grow strongly and that Premier Lodge would sit well alongside its mid-market Village Hotels and upmarket De Vere Hotels brands.
A successful bid, which is likely to require an offer in excess of £500m, would make De Vere one of the largest hotel companies in the UK based on numbers of rooms, the group said.
The auction is expected to conclude at the end of next month.
Under the proposed move Sun Capital would own most of the assets while De Vere would be responsible for operating them. Leisure entrepreneur Hugh Osmond, who is the former joint owner of Pizza Express and the founder of Punch Taverns, backs Sun Capital.
De Vere, which includes Brighton’s famous Grand Hotel and the Belfry golf complex in its portfolio, achieved a 5.3% rise in annual underlying profits during its last financial year to the end of September.
It is currently the subject of attempts by a rebel shareholder group to force the sale of its UK hotels business.
GPG Holdings – a subsidiary of Guinness Peat Group – has made a £118m offer to lift its stake from 10% to 35%, described by De Vere as an “insult to shareholders”.
It is making the partial offer so it can get two directors on the De Vere board and force the sale of the hotels business.
References: EGi News 22/04/04
