Jarvis backs management buyout bid

Jarvis Hotels yesterday joined the throng of hoteliers quitting the stock market after its board backed a £159m takeover bid from its management team.

John Jarvis, the chairman, and Richard Thomason, the chief executive, backed by a consortium of Irish investors, are paying 145p a share to take the company private in a deal worth £228m including debt. Macdonald Hotels, Thistle Hotels and Hanover International have all left the stock market this year.

Trefick, Jack Petchey's investment vehicle and the group's biggest shareholder with a 29.7 per cent stake, has agreed to accept the offer, although some investors say it undervalues the company.

Reporting a drop in interim profits, Mr Jarvis said the prospects for the rest of the year remained "uncertain". Along with its peers, Jarvis Hotels has struggled to cope with the collapse in the corporate travel market. Margins have suffered in the switch in focus towards leisure travellers.

The company, which operates the US-based Ramada brand in Britain, reported pre-tax profits of £4m for the 28 weeks to 11 October, down 60 per cent from the previous year. Although occupancy levels edged higher to 70.5 per cent, room rates fell to £50.17 from £52.29 a year earlier. Revenue per available room - a key industry measure - slipped 3.3 per cent to £35.38.

Kayterm, the directors' bidding vehicle, said it had received irrevocable acceptances or non-binding letters of intent from just over 50 per cent of the group's shareholders. The offer represents a 42 per cent premium to the average six-month share price before speculation about a takeover bid began, according to Mr Jarvis.