Stakis poised to buy Metropole hotels for pounds 320m
Friday 18 October 1996
The company would almost certainly have to tap shareholders for funds to make the purchase. Stakis shares have performed strongly this year, but at the current market price of 100.5p the group, which almost went to the wall in the late 1980s, only values the group at pounds 485m. One analyst said Stakis would probably have to make a one-for-two rights issue to raise the bulk of the funds to clinch the acquisition.
Stakis, headed by David Michels, yesterday declined to comment, as did Lonrho. However, leisure industry sources said Stakis was the clear front- runner to buy the Metropole hotels, which are considerably larger than the industry average in terms of the number of rooms.
The jewel in the Metropole portfolio is the 700-room hotel located on London's Edgware Road. This hotel was valued in the summer at pounds 147m. The valuation does not take account of pounds 80m of planned investment to make it the first 1,000-plus room hotel in the capital, which is basking in boom conditions last seen in the mid-Eighties.
Plans for the Edgware Road hotel also incorporate the building of a conference centre that would be the largest in inner London, and is aimed at boosting Metropole's core customer base - the business traveller.
It is understood that this increase in size could push Lonrho's asking price for the Metropole hotels to as much as pounds 350m. Two Metropole hotels are located in Brighton, and the other two are in Blackpool and Birmingham.
A leisure industry source said Stakis's ambitions to buy the Metropole chain were unlikely to involve the disposal of its provincial casino operations.The casinos have underperformed in the past couple of years, but there are signs that they are turning the corner and will turn into a useful cash cow for Stakis to use to develop its capital-intensive, and predominantly three-star, chain of hotels. There is also the as-of-yet unquantifiable benefit from Government plans to further deregulate gaming, such as granting casinos the freedom to advertise, something which they are banned from doing.
Disposal of the Metropole chain would still leave Lonrho with its unwanted 10-strong chain of Princess hotels, which are mainly sited in resorts in the US, the Caribbean, and Mexico. There is said to be no shortage of potential buyers in the US for the Princess business, including the Hilton Hotels Corporation, ITT Sheraton and Marriott.
A swift trade sale at top-dollar price of both the Metropole and Princess chains would heap more embarrassment on SBC Warburg, which tried to float Lonrho's hotels interests as a single company earlier this year. The flotation was cancelled with SBC Warburg unable to attract enough interest for a flotation value pitched at pounds 700m, and amid increasing interest from buyers for either the Metropole or Princess chains.
During the process, analysts were sceptical about the logic of having different hotel groups operating under one umbrella.
- 1 Nokia no more: Microsoft drops once-ubiquitous mobile name – in favour of its Lumia brand
- 2 Renee Zellweger on plastic surgery: 'I'm living a fulfilling life and I'm thrilled that perhaps it shows'
- 3 Banksy not arrested: Internet duped by fake report claiming artist's identity revealed
- 4 Australian café owner sparks debate after saying 'No' to having unruly children on premises
- 5 Couple die within 28 hours of each other after being married for 73 years
Ottawa shooting: Canadian soldier dies after being shot at National War Memorial – with one gunman killed inside parliament
Renee Zellweger on plastic surgery: 'I'm living a fulfilling life and I'm thrilled that perhaps it shows'
Isis releases first video showing the stoning of woman accused of committing adultery as her father shouts 'don't call me Dad'
Banksy not arrested: Internet duped by fake report claiming artist's identity revealed
Diwali 2014: What is the festival of lights and how is it celebrated around the world?
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Of course, teenage girls need role models – but not like beauty vlogger Zoella
Residents should throw a street party and mix with immigrant neighbours, councils told
Support for EU membership 'at highest level since 1991' with most Brits wanting to stay 'in'
Russell Brand threatened with arrest after filming outside Fox News headquarters
London bus driver 'kicks gay couple off for kissing'
iJobs Money & Business
£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...
£18000 - £23000 per annum + Commission: SThree: The SThree group is a world le...
£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...
£20000 - £25000 per annum + OTE £Competitive: SThree: SThree Group and have be...