Shanghai Motel to be bought by Home Inns
By Cao Qian |
May 28, 2011, Saturday
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Print Edition
Print Edition
HOME Inns & Hotels Management Inc, China's largest budget hotel operator, announced yesterday that it has agreed to buy the entire stake of Shanghai Motel Management Ltd for US$470 million as the Nasdaq-listed company moves to further consolidate its market leadership.
Home Inns will offer US$305 million in cash while the rest will be paid through additional share sale. A total of 8.15 million ordinary Home Inns shares will be issued at a price of US$20.185 upon completion of the deal, which should be around the fourth quarter of this year, the company said in Shanghai.
Morgan Stanley, which invested in Shanghai Motel, China's fifth-largest budget hotel chain operator with 281 hotels currently around the country, about five years ago, is the controlling shareholder of the company with a 59 percent stake.
"The price is pretty much close to our earlier expectation," said David Sun, chief executive officer of Home Inns.
"The acquisition will allow us to extend our footprint at a much faster pace while it also goes perfectly with Home Inns' multi-brand strategy for future growth."
When completed, Home Inns will boast an overall portfolio of more than 1,120 hotels in about 170 cities across China, it said.
As of March, Home Inns operated 848 hotels while 7 Days Inn Group, its closest competitor, ran 619 hotels, according to data compiled by Inntie, a hotel industry consultancy firm.
Motel 168, a major brand under Shanghai Motel, will be retained due to its already mature brand image and well-established recognition among travelers, Sun said.
At the same time, Home Inns will continue to develop its own brands - the budget Home Inns brand and the premium Yitel brand.
Home Inns announced in January that it will extend its portfolio of Home Inn budget hotels to nearly 1,100 by the end of this year by adding between 260 and 280 new inns during the 12-month period.
As for the premium Yitel brand, three or four new hotels will be added.
Home Inns will offer US$305 million in cash while the rest will be paid through additional share sale. A total of 8.15 million ordinary Home Inns shares will be issued at a price of US$20.185 upon completion of the deal, which should be around the fourth quarter of this year, the company said in Shanghai.
Morgan Stanley, which invested in Shanghai Motel, China's fifth-largest budget hotel chain operator with 281 hotels currently around the country, about five years ago, is the controlling shareholder of the company with a 59 percent stake.
"The price is pretty much close to our earlier expectation," said David Sun, chief executive officer of Home Inns.
"The acquisition will allow us to extend our footprint at a much faster pace while it also goes perfectly with Home Inns' multi-brand strategy for future growth."
When completed, Home Inns will boast an overall portfolio of more than 1,120 hotels in about 170 cities across China, it said.
As of March, Home Inns operated 848 hotels while 7 Days Inn Group, its closest competitor, ran 619 hotels, according to data compiled by Inntie, a hotel industry consultancy firm.
Motel 168, a major brand under Shanghai Motel, will be retained due to its already mature brand image and well-established recognition among travelers, Sun said.
At the same time, Home Inns will continue to develop its own brands - the budget Home Inns brand and the premium Yitel brand.
Home Inns announced in January that it will extend its portfolio of Home Inn budget hotels to nearly 1,100 by the end of this year by adding between 260 and 280 new inns during the 12-month period.
As for the premium Yitel brand, three or four new hotels will be added.
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