Main Photo: The easyHotel Chester, an owned hotel opening 2020
Date: August 2019
Location: Mostly UK, Amsterdam, Berlin, Frankfurt, Sofia, Barcelona, Zurich
No. of Keys: 3,633 (open)
Seller: easyHotel PLC said on Monday its independent directors have agreed to a cash takeover offer for their 0.7%. The budget hotel operator said each of its shareholders will receive 95.00 pence per share, a 35% premium to Friday’s closing price of 70.50p and a 27% premium to the six-month volume-weighted average price of 75.00p. The stock was up 34% at 94.40p each in London on Monday morning.
Buyer: Property developers Ivanhoe Cambridge and existing investor, ICAMAP Invetments Sarl, who have created a new public limited company named Citrus UK Bidco Ltd to make the offer.
Real estate fund manager ICAMAP, which is easyHotel’s largest shareholder with a 39% stake, said it needed “an equally supportive investor” in order to develop the hotel chain.
The company said the takeover could help its European expansion strategy. It has already unveiled plans to build a hotel near the Charles De Gaulle Airport in Paris and on Wednesday announced the acquisition of a property in Nice from Accor SA-owned budget rival Ibis.
easyHotel Non-Executive Chairman Jonathan Lane said: “The independent easyHotel directors consider that the offer is fair and reasonable and in the best interests of shareholders, the company, its employees and wider stakeholders.
“Liquidity in easyHotel stock has been limited since the company was admitted to AIM five years ago. If accepted, the offer should enable the easyHotel group to accelerate its expansion into major European cities where it sees significant opportunity, underpinning the long-term growth and prosperity of the easyHotel brand.”
However Sir Stelios Haji-Ioannou has urged easyHotel shareholders to reject the near-£139m offer for the budget hotel chain he founded because he says the bid is too low.
Haji-Ioannou owns 27% of easyHotel through his easyGroup investment company, which also oversees his stake in easyJet and other ventures. He launched easyHotel in 2004 and has a 34% stake in easyJet worth about £1.2bn.
He said: “I find the offer from ICAMAP to be very low and I urge all other shareholders to take no action (ie not accept the offer) until the true value and future potential of easyHotel can be evaluated.”
EasyHotel owns 12 hotels and has another 26 franchised sites, with 17 more in development. Its operations span the UK, Europe and Dubai. The company, which describes itself as an “ultra-budget” hotel operator, floated on the stock market in 2014.
Ivanhoé Cambridge and ICAMAP said easyHotel’s ownership structure makes its shares difficult to trade and restricts the company’s ability to raise the capital needed for expansion.
Haji-Ioannou’s opposition to the offer is the latest in a series of disagreements he has had with the management of companies he founded. He has had several disputes with the board of easyJet and in 2016 objected to high director pay at easyHotel.
Harm Meijer, the managing director of ICAMAP Advisory, said: “Our offer enables shareholders to exit from an illiquid stock at a 34.8% premium and, we believe, will result in greater clarity of ownership and direction for the company and its management team.”
The bidders said they were open-minded about whether they take the company private or invest in it as a public company. The offer requires them to own at least 50% of the shares.
In May, easyHotel posted a first-half loss of £120,000, which it blamed on the temporary closure of its hotel in Old Street, London, and higher depreciation in the value of new hotels. The company said the outlook for the hotel business was uncertain, particularly in the UK, where Brexit was affecting confidence.
EasyHotel shares rose 35% to 94.5p in late morning trading on Monday. Before the bid was announced they had fallen to 70.5p from 115.5p in the past year.
Price: £126m – The offer values easyHotel’s share capital at GBP138.7 million and gives the company an enterprise value of GBP126.1 million.
Price per Key: £34,682
THPT Comment: Stelios has never been an easy (excuse the pun) bedfellow with his fellow directors and shareholders over the years, both at easyJet and easyHotel. We suspect this is a great deal for the shareholders and the company going forward. Good luck to Guy Parsons, CEO with the fab growth the hotel company has had this past two years.
The Hotel Property Team (THPT) is a small group of highly experienced business professionals. Between us, we provide a range of skills and experience which is directly relevant to those involved in the hotel property market.