Whitbread set to offer pounds 550m for Swallow's hotel chain
Monday 22 November 1999
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."
- 1 Rules on 5p plastic bags likely to lead to arguments at the check-out
- 2 Hulk Hogan wants to be Donald Trump's running mate in the US Presidential election
Rules on 5p plastic bags likely to lead to arguments at the check-out
Watch the Supermoon live: How to see the brightest Moon of the year tonight
Hulk Hogan wants to be Donald Trump's running mate in the US Presidential election
Blood Moon and Supermoon: September to bring brightest – and dimmest – full Moon of the year on same night
Turkey duped the US, and Isis reaps rewards
Climate change: 2015 will be the hottest year on record 'by a mile', experts say
'Women only' train carriages: Jeremy Corbyn unveils radical move to tackle public harassment
Black holes are a passage to another universe, says Stephen Hawking
Tony Blair attacks Jeremy Corbyn's 'Alice In Wonderland' politics
Theresa May says migrants should be banned from entering the UK unless they have jobs lined up
Iain Duncan Smith 'should resign over disability benefit death figures', says Jeremy Corbyn
iJobs Money & Business
£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...
£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...
£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...
£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...