Lonrho hotel float on ice as buyers nibble
Friday 06 September 1996
The announcement, the day before Lonrho was due to publish a prospectus detailing an international share offer, prompted analysts to draw up a list of potential bidders for the hotels.
Names in the frame included specialist resort operators in the US such as Renaissance, which might be interested in the luxury Princess hotels, while the UK-based Metropole could attract the likes of casino group Stakis or Bass, operator of the Holiday Inns. Companies that might be interested in acquiring the whole operation include Millennium & Copthorne, whose own portfolio includes hotels in both Britain and the US, as well as the US-based chains Marriott, ITT Sheraton and Hilton.
But Sir Rocco Forte, who has been linked with the luxury Princess hotels in the US, ruled out an approach. "We are not interested in any parts of the Lonrho business," said a spokesman. "We are a small, start-up team based in London with no plans to emigrate to the United States."
A Lonrho spokesman declined to identify the bidders but said both British and overseas parties had expressed interest in the hotels, with some looking at the entire group and others interested in parts of it: "The bids were definite enough for Dieter Bock [Lonrho's chief executive] to say we ought to evaluate them before committing to the sale of the entire group by flotation," he said.
A decision on the future of the hotels is expected to be made by the end of the month.
Analysts reckoned a trade sale of the Princess and Metropole chains en bloc was unlikely. They believe the most probable outcome would see the Princess chain sold, with Metropole floated as a separate entity.
Renaissance, operator of the Renaissance, New World and Ramada International hotels, is "standing at a very high multiple in the US", said Greg Feehely, leisure analyst at Kleinwort Benson. "That's a good time to do a rights issue.
Some analysts said a sale of the hotels would have to carry a premium of up to pounds 150m to the estimated pounds 700m market valuation.
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