Travelodge in lb1bil Sell-off
UNITED KINGDOM, March 27, 2006. Budget hotel group Travelodge could be about to change hands for lb1 billion, it was reported in the UK press.
The Sunday Times said the chain's owner private equity firm Permira has met with potential advisers over the handling of a possible sale or flotation of the business. The sale would provide a multi-million pound windfall for Travelodge's management team, led by chairman Keith Hamill and chief executive Grant Hearn, the paper reports. Both own a significant portion of the shares.
It is understood investment banks Citigroup, Deutsche Bank and UBS have all made a presentation to Permira. A decision on which will be given the role of adviser is expected in the next few weeks. Hearn has previously stated his preference to lead a management buyout of the business with backing from another private-equity group.
There is expected to be stiff competition for the business. Whitbread, which owns larger rival Premier Travel Inn, is likely to be interested and is thought to have already laid the groundwork for a possible bid.
Permira paid lb712 million in January 2003 to acquire Travelodge from Compass, the contract catering company. That acquisition also included Little Chef, the chain of roadside restaurants. Less than two years later, Permira recouped about lb400 million from a sale-and-leaseback of 139 of its hotel properties.
It sold Travelodge Ireland business for lb14.2 million. Last year, it sold Little Chef for lb52 million to Lawrence Wooskow and Simon Heath, the catering entrepreneurs, after closing a number of its underperforming restaurant sites. Travelodge has 17,500 bedrooms across 291 hotels.
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