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. Last Updated: 07/27/2016

Ladbroke Makes Bid For Stakis




LONDON -- British hotels and gaming company Ladbroke Group PLC on Monday announced an agreed cash and share offer for rival hotelier Stakis PLC, valuing the Glasgow-based group at pounds 1.16 billion ($1.90 billion).


The deal, if completed, will push Ladbroke's Hilton International division to No. 2 spot in the British hotel industry, and make it the largest four-star luxury hotel chain.


The offer values each Stakis share at 144.25 pence, which together with Stakis' final dividend of 1.75 pence, makes 146 pence. Ladbroke said the recommended offer for Stakis comprises 57.7 pence of cash and the remainder in new Ladbroke shares.


Ladbroke's chief executive, Peter George, said the Stakis deal was a very good fit, adding considerable scale to its operations in Britain. He said Stakis was always its number one target in Britain, and the casinos and health clubs also made a good fit.


"This will double our number of hotel rooms to over 16,000 and make us clearly the number one four-star luxury hotel chain in Britain," said George in an interview.


Currently, Granada Group PLC's Forte hotel division is the largest hotel group in Britain with over 30,000 rooms.


The company said it sees costs saving of at least pounds 16 million annually by the year 2000, and it added that the deal will be earnings enhancing in its current financial year.


"This is a fair price that we have agreed, but there is always a danger that someone else will come in with a bid," said George, adding that the group's debt-to-equity gearing will rise to over 60 percent from just over 30 percent at present.


George said the deal will bring together Ladbroke's 38 Hilton British hotels with 53 Stakis hotels, and Ladbroke's five London casinos with 22 Stakis, largely provincial, casinos. Stakis also has 67 Livingwell health clubs, some of which are based in Hilton properties.


Ladbroke says it intends to rebrand Stakis hotels as Hilton hotels to strengthen the brand in Britain.