Extra 20p secures Macdonald for bosses

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The Independent Online

Macdonald Hotels is to be taken private in a £157m controversial management buyout - but only after an extra 20p per share was squeezed out of the founding directors.

Donald Macdonald, the chief executive, said his co-founders had bowed to pressure to raise the original offer after the group's property assets were re-valued. He said 260p per share was "on the high side" but raising the bid was the only way to secure a recommendation from the company's independent director.

Institutional investors had heaped criticism on the group for leaving the task of evaluating the offer up to just one independent director, Calum MacLeod. He responded by persuading the board to appoint Christie's, the hotel property experts, to re-value the company's fixed assets, which are worth 258.4p per share.

Mr MacLeod said he believed the bid provided "certainty and value" for shareholders. The deal comes a month after the group's five founding directors admitted they were keen to take the group private, citing frustration at the lack of liquidity in its shares. Mr Macdonald, who co-founded the group in 1990 with Gerry Smith, Frank O'Callaghan, Donald MacDonald and Sandy Orr, said the board's near-30 per cent stake put it in an awkward position.

"We didn't want to sell the company too cheaply but we didn't want to overpay." He said the price was "fair... in a climate where institutions have been digging their heels in".

Two recent takeovers - of PizzaExpress and Fitness First - have been hampered by institutions refusing to sell their stakes because they thought the offer undervalued the companies' prospects. James Wheatcroft, an analyst at Investec Securities, said: "Although not over-generous, a higher bid is unlikely given the control of the founders over the company."

On completion, the hotel chain's management will share ownership with Bank of Scotland, part of HBOS, which is providing the financing.

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