Permira lines up Principal chief for De Vere

Tony Troy, the former UK head of the Le Meridien hotel group who now runs Principal Hotels, owner of the landmark George hotel in Edinburgh, has been lined up as the new chief executive of De Vere by its suitor, Permira.

The private-equity firm is getting ready to pounce on De Vere, the operator of the Belfry hotel, with a formal £736m offer in the coming week to derail an agreed £723.5m deal with Richard Balfour-Lynn's Alternative Hotels Group (AHG), it emerged yesterday. De Vere shares jumped 4 per cent to 848p.

Permira wants to combine De Vere's 19 upmarket hotels, which include Brighton's Grand and the Cavendish in London's Mayfair, with the six-strong Principal Hotels chain it has just acquired from Royal Bank of Scotland. It has joined forces with RBS and the Delancey property firm to make a "serious offer" for De Vere after three months of on-off talks.

Permira hastily tabled an indicative proposal of 840p a share on Friday night to trump AHG's offer of 825p for De Vere. But the company's board, which is led by the chief executive Carl Leaver and the chairman David Richardson, rebuffed Permira's approach as too conditional and agreed a deal with AHG late on Saturday.

Permira is still studying De Vere's books and working on resolving numerous issues, including the company's pension deficit of £39.2m and debts of £232m. AHG said it would take on the debt and pay off the pension deficit if its takeover goes ahead. It has received irrevocable undertakings from holders of 20.1 per cent of De Vere's shares, including the two largest investors, the non-executive director Stephen Morgan and the property tycoon Jack Petchey, as well as the former chairman, Lord Daresbury. Permira urged shareholders yesterday to "take no action" for the time being.

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

AHG bought Rentokil Initial's conference venues business in November and wants to integrate it with De Vere's hotels. Mr Balfour-Lynn is also keen to roll out De Vere's Village brand of hotel developments. He says he would sell the Greens health club business but hold on to the G&J Greenall spirits division, for its properties.