Jarvis Hotels to go private as directors approve £158m management buyout bid

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The Independent Online

Jarvis Hotels was likely to become the latest hotelier to quit the stock market yesterday after its independent directors recommended a £158m management buyout.

A deal would crystallise a £30m profit for the veteran property entrepreneur Jack Petchey who has built up a 29.7 per cent stake in the Buckinghamshire-based hotel group over the past two years. He holds the shares through his Trefick investment vehicle and has pledged to support any offer from the executive team.

John Jarvis, the chairman, and Richard Thomason, the chief executive, have joined forces with Lioncourt Capital, the Irish investment firm behind Jarvis' £150m sale-and-leaseback deal last year.

The company said it had received a proposal regarding a potential offer from the stalkers' buyout vehicle, Kayterm, worth 145p per share. An offer remains subject to "completion of financing and confirmatory due diligence", it said, adding that its independent directors were happy to back a bid at this level.

Jarvis's shares, which have soared in recent weeks on takeover speculation, were flat at 143.5p. It has risen from 86.5p in April on hopes that the sector was recovering and rumours that Mr Petchey, who acquired rival hotelier Hanover International in August, was preparing a bid. Dawnay Day, the activist investment and advisory company, also increased its stake to more than 4 per cent.

Shares in the upmarket hotel company Millennium & Copthorne and UK-based De Vere Group both rose strongly as the interest in Jarvis forced investors to re-appraise the beleaguered hospitality sector.

Mark Reed, an analyst at Teather & Greenwood, said: "I never expected a bidding war. Most investors have been waiting for an exit so I don't think they'll be unduly upset."

Some expressed surprise that the independent directors had caved in without a fight, noting that resistance from non-executives at MacDonald Hotels squeezed an extra 20p per share from their management team, who took the company private earlier this year.

"You have got to be a bit worried there isn't going to be a revaluation," one analyst said.

Sources close to Jarvis said that without a recommendation from the company's independent directors, the management team, who hold just 2 per cent of the equity, would not be willing to proceed with an offer.