Whitbread set to offer pounds 550m for Swallow's hotel chain

SWALLOW, THE UK hotel operator formerly known as Vaux, is today expected toconfirm that it is in talks regarding a possible takeover by Whitbread, the brewing and leisure group.

Speculation that the two companies were in advanced negotiations began on Friday following a last-minute surge in Swallow's shares, which shot up more than 10 per cent to close 30p higher at 307.5p. It is understood that the financial advisers to the two companies spent much of the weekend in discussions and that Whitbread was yesterday preparing to offer about pounds 550m, or 375p a share for Swallow, a 35 per cent premium to Friday's closing price.

If the deal goes ahead, it is likely that Whitbread would merge the 38, mostly four-star, Swallow hotels with its own UK Marriott chain. The two groups are thought to have held talks a year ago on a possible tie-up which foundered over price.

Analysts said Whitbread is badly in need of a deal of this scale after it lost out to Punch Taverns to buy Allied Domecq's retail unit. Its failure made Whitbread the subject of takeover speculation, both as a target and a buyer.

Swallow has long been seen as a bid target, but attention has been focussed on a merger with Greenalls, the leisure group that recently sold its pub chain to Scottish & Newcastle. Greenalls is reported to have held informal talks with Swallow over a possible pounds 1bn merger of their hotel businesses. It has also been suggested that Whitbread could bid for Greenalls.

Whitbread manages 36 Marriott hotels in Britain, including 10 hotel and country clubs, which would fit neatly with Swallow's hotels, which are mainly in town centres.

Swallow also has a small chain of managed pubs. The company, which is based in the North-east of England, closed its two breweries in Sunderland and Sheffield this summer and then sold off most of its tenanted pubs.

Aside from pubs and hotels, Whitbread has the UK licences for Pizza Hut and TGI Friday's, and owns the David Lloyd Leisure fitness club chain. The company spent pounds 194m during the first half of this year to expand its leisure, budget hotel and coffee businesses and expects to spend about the same on expansion plans during the second half.

Announcing the group's first half results in October, David Thomas, Whitbread's chief executive, said: "We are gearing up for growth."

peopleFrankie Boyle responds to referendum result in characteristically offensive style
Life and Style
Couples have been having sex less in 2014, according to a new survey
New Articles
i100... with this review
Holly's review of Peterborough's Pizza Express quickly went viral on social media
footballTim Sherwood: This might be th match to wake up Manchester City
Arts and Entertainment
musicHow female vocalists are now writing their own hits
New Articles
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
musicBiographer Hunter Davies has collected nearly a hundred original manuscripts
Blahnik says: 'I think I understand the English more than they do themselves'
Arts and Entertainment
Michelle Dockery as Lady Mary Crawley in Downton Abbey
TVInside Downton Abbey series 5
Life and Style
The term 'normcore' was given the oxygen of publicity by New York magazine during the autumn/winter shows in Paris in February
fashionWhen is a trend a non-trend? When it's Normcore, since you ask
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam