Malmaison chief wins De Vere takeover battle with £767m offer

Click to follow

The Malmaison and Hotel du Vin chief, Richard Balfour-Lynn, won a hard-fought takeover battle yesterday for De Vere, the operator of the Belfry golfing hotel, after agreeing an increased offer of £767.4m which prompted the private-equity firm Permira to pull out.

Mr Balfour-Lynn's investment vehicle, Alternative Hotels Group, twice raised its cash offer from an original price of 825p a share to 850p last week and 875p yesterday.

AHG said it had built up a 28.3 per cent stake in De Vere, which owns trophy hotels, including the Cavendish in London's Mayfair and Brighton's Grand, as well as 16 Village-branded hotel developments in the mid-market range. AHG is taking on De Vere's debts of £232m and said it would pay off the pension deficit of £39.2m.

The offer, again recommended by De Vere's board, trumped a previous informal proposal from Permira of 840p a share. Insiders said the price reached a level where Permira, which owns the budget hotel chain Travelodge, no longer wanted to compete as it was careful not to overpay for assets.

"After considering its options, Permira has decided that it does not intend to make a formal offer for De Vere," the group said. It had teamed up with Royal Bank of Scotland and James Ritblat's property firm Delancey to make a formal counter-offer. The private-equity firm had also lined up Tony Troy as the new chief executive of De Vere. Mr Troy runs the six-strong Principal Hotels business that Permira recently bought from RBS.

AHG's bid attracted controversy because the firm agreed a side deal with one of De Vere's main investors in return for his pledge to accept the offer.

AHG was set up last year by Mr Balfour-Lynn with Bank of Scotland and four directors of the property firm Marylebone Warwick Balfour, where he is chief executive. Marylebone owns the Malmaison and Hotel du Vin chains.

AHG bought Rentokil Initial's conference and training venues business in November and wants to combine it with De Vere's 19 upmarket hotels. Mr Balfour-Lynn is also keen to roll out the Village brand. He intends to sell off the Greens health club business but hold on to the G&J Greenall spirits division, as he values its properties.

AHG was a late entrant to the UBS-run auction, which attracted interest form Starwood Capital and NH Hoteles of Spain. De Vere has agreed to pay £7.45m to AHG if it accepts another offer.