De Vere, the hotelier that owns Cavendish St James's in London, yesterday revealed that it had teamed up with Hugh Osmond in the bidding for Premier Lodge, the budget hotel chain.
The company said it had joined a "competitive auction" for Premier that is thought to include three other bidders - Whitbread, Nomura's asset finance group and Apax Partners. The 132-strong hotel chain could fetch as much as £550m.
Sun Capital Partners, the investment vehicle of Mr Osmond, the former owner of Pizza Express, has been interested in snapping up the property portfolio of Premier for some time and has been looking for a partner to operate the business. Under their deal, Sun Capital would stump up almost all of the capital needed for the takeover and De Vere would run the hotels.
Whitbread is thought to have been in pole position in the auction after Travelodge pulled out, but a De Vere/Sun Capital offer could provide some heavyweight competition.
"The board believes that the UK budget hotel sector, which has grown rapidly in the past, will continue to do so strongly and the acquisition of Premier would provide De Vere with a second growth brand," a statement from the company said. As well as the upmarket De Vere hotels, the group owns the Village Hotels chain, aimed at mid-market customers. A takeover of Premier would make De Vere one of the largest hotel companies in the UK.
De Vere is under pressure to improve its own performance and is itself fending off a takeover bid from Guiness Peat Group. Guinness Peat is trying to buy 25 per cent of De Vere's shares to give it a controlling stake, but the board has rejected its offer. Guinness Peat wants De Vere to seek a buyer for its 21 upmarket hotels, which are worth about £551m, and return the majority of the proceeds to shareholders.
If De Vere's bid for Premier were successful, it would mark a return to the business for De Vere. It owned the original Premier Lodge business before selling it to Scottish & Newcastle in 1999.
The private equity consortium Spirit Group is now selling Premier after having bought the group as part of Scottish & Newcastle's £2.5bn pubs estate.Reuse content