|By Sarah Bridge, Daily Mail, London|
Knight Ridder/Tribune Business News
Apr. 25, 2004 - Stockbroker Collins Stewart is understood to be the preferred bidder for budget hotel group Premier Lodge, being sold by pub company Spirit Group.
Collins Stewart is believed to have made a bid of about UKpound 560 million for the chain of 120 hotels in a deal underwritten by other City institutions. It plans to take temporary ownership of Premier Lodge before floating it on the Alternative Investment Market in a so-called "accelerated initial public offering'.
The broker has used this method in other deals before, including those involving Center Parcs UK and Northumbrian Water. It is seen as a way of enabling City institutions to outbid private equity parties at auctions.
If successful, Collins Stewart will have beaten venture capital firm Apax, investment bank Nomura, and a partnership of De Vere hotels and Sun Capital Partners. Whitbread, owner of the Travel Inn hotel chain, was the main would-be trade buyer, though US hotels giant Starwood was also understood to have been allowed back into the bidding process at a late stage.
The management team is likely to remain with Premier Lodge, but Collins Stewart is expected to appoint a heavyweight City figure as nonexecutive chairman.
The chain was put up for sale in February by Spirit Group, which acquired Premier Lodge as part of its recent UKpound 2.5 billion capture of Scottish & Newcastle's pub estate.
The sale is being handled by investment banks Merrill Lynch and Bear Stearns.
Spirit Group, headed by Cafe Rouge founder Karen Jones, was formerly part of Punch Taverns, the pub company founded by Hugh Osmond, whose Sun Capital outfit was one of the interested parties in Premier Lodge.
Once Spirit Group has offloaded Premier Lodge, it is likely to prepare to float itself, either late this year or in early 2005, having recently sold 220 pubs to a property consortium of Nick Leslau and Tom Hunter.
It owns or manages 2,470 branded and unbranded pubs, including Bar Room Bar, Wacky Warehouse and Mr Q's.
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