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Permira hopes to top AHG bid in the battle for De Vere

29 June 2006

Private equity firm Permira plans to trump Alternative Hotel Group's (AHG) £1b offer for De Vere, as the battle for ownership of the hotel and leisure group intensifies.

After 18 months of speculation, De Vere's board of directors recommended a bid from Marylebone Warwick Balfour's chief executive, Richard Balfour-Lynn, through his AHG Venice vehicle, of £8.25 per share last week (24 June).

The cash bid values De Vere at £723.5m, but with debt and pension liabilities included, the price tag rises to £1.1b.

But Permira, which owns the Travelodge chain, still claims to be in the running. A spokesman said the company was optimistic about submitting a formal bid, now that its deal to acquire the six-strong Principal Hotels chain for £300m had completed.

He said: "We are completing due diligence and working very hard to get an offer on the table in the next few days."

However, other reports suggest Permira's informal approach on Monday (26 June) with an offer of £8.40 per share was highly conditional, meaning AHG's late-entry bid was the only one being considered by De Vere.

De Vere chief executive Carl Leaver confirmed that the company had been in discussions with a number of potential bidders. But he told Caterer: "The board has only had one offer that is capable of being accepted by our shareholders. That is from AHG."

He added: "The board would have been foolish and irresponsible to reject a certain offer from AHG in the hope that Permira or any other bidder would deliver a higher offer."

If AHG's bid is successful, Balfour-Lynn plans to develop the De Vere and Village brands. He said: "There is considerable scope to expand and develop both brands over the medium term."

A spokesman for AHG, which recently bought Verve Venues (formerly Initial Style Conferences) would not rule out rebranding in the long term.

De Vere's health and fitness arm, Greens, would also be considered for disposal, as it does not fit with AHG's core hotel and conferencing business.

If the AHG deal is approved by the pension's regulator and De Vere shareholders, it should complete by September. At the time of going to press De Vere shares had jumped 4% to 848p.

  • The court case between the Belfry's owner the Quinn Group and hotel operator De Vere over the implementation of a new company logo has now ended and a judgment is expected within a fortnight.

By Emily Manson

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