Founders bid £145m for Macdonald

The founding directors of Macdonald Hotels are seeking to buy back the group they started 13 years ago in a move that could value the company at up to £145m.

Donald Macdonald, the chief executive, has joined forces with four other directors to table a 240p-per-share takeover approach, the company announced yesterday. The news sent the company's stock up 11 per cent to 236.5p, its highest level for three-and-a-half years.

Analysts said the price looked fair and cast doubt over the possibility of another suitor emerging. Peter Joseph, at KBC Peel Hunt, said the nature of the group's joint venture agreement formed two years ago with Bank of Scotland to acquire Heritage Hotels for £235m meant "the bank called the shots" in terms of who it worked with. Another analyst said the board's 30 per cent stake could deter rival bidders from entering the fray.

Mr Macdonald blamed the stockmarket's "lack of interest in small cap companies over the past three years" for prompting the management buyout. "[Despite] fairly impressive and consistent growth since we floated ... that performance has not been reflected in our historic share price, preventing us from using our share capital to fund expansion," he said.

City sources said either Royal Bank of Scotland or Bank of Scotland, owned by HBOS, would provide the financing. Mr Macdonald would not be drawn, but said the directors had "banking in place".

The group, founded in 1990, has mushroomed from just two sites in Aberdeenshire to more than 100 properties across the UK and Spain. Its biggest coup was acquiring Heritage's 48 sites in April 2001. The deal boosted its presence in the South-east, where its properties include Oxford's upmarket Randolph Hotel, and turned the group into the UK's eighth-biggest hotel chain. The group also handles timeshares following its purchase of Barratt International Resorts.

Calum MacLeod, a non-executive director, stressed that the approach from Mr Macdonald, Gerry Smith, Frank O'Callaghan, Donald MacDonald (no relation to the chief executive) and Sandy Orr "may or may not lead to an offer".

The company recently reported pre-tax profit for the six months to end-April of £6.2m, down 9 per cent on the previous year. Turnover was £67.2m.

Mr Joseph said the indicated offer price represented a multiple of around 12 times earnings.

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