Inside Track by Peter Martin
Spirit, the pub company that inherited Premier Lodge as part of its £2.5bn takeover of the Scottish & Newcastle retail business, is hard at work preparing for the chain’s disposal.
Permira, the private equity house that already owns the Travelodge chain, will start as front-runner in the race to buy Premier Lodge. Permira is seen to want the deal more than any of the other potential suitors. Spirit is said to want around £600m for the 130 odd hotel sites and 40 or so adjoining restaurant businesses.
Others understood sizing up a bid include Bob Ivell, the former chairman and managing director of Scottish & Newcastle Retail, who having developed the chain in recent years knows Premier Lodge better than most.
As a consequence of running the successful auction of the S&N retail business, Ivell has built up an impressive City following with plenty of potential backers for a bid for part of his old business, and has his former finance director John Leslie working with him.
But, one name that will almost certainly be missing from the list of bidders will be Mitchells & Butlers. The pub and restaurant operator is the UK’s leading franchisee for Express by Holiday Inn and also has its own Innkeepers Lodge brand.
Logic would suggest M&B would want to add to that market presence, but chief executive Tim Clarke’s mistrust of the hotel market is more likely to keep out of the race.
Clarke’s apparent aversion to hotels is a legacy of his time as chief executive of SixContinents when he was running big name brands such as InterContinental, Crowne Plaza and Holiday Inn as well as the pub business he now controls.
However, Clarke is under some pressure to come up with a deal, and he must be feeling a little uncomfortable after this week’s public embarrassment for his old boss Sir Ian Prosser, who was forced to step aside as chairman-designate at Sainsbury, the supermarket chain. Nonetheless, Premier Lodge is likely to stay off Clarke’s shopping list.
Whitbread should line up among the possible Premier Lodge buyers. But its long-term caution over paying too much has meant the hotels, restaurant and leisure group has also become a virtual deal-free zone. Despite the attractiveness of being able to add quality sites to its Travel Inn, not to mention its pub restaurant, portfolio, it may yet sit this one out.
Premier Lodge is likely to be just the first step in Spirit’s sell-off plans in a run up to a planned stock market flotation.
But contrary to perceived wisdom before its acquisition of S&N Retail, it is more likely to be its top end pubs and restaurants rather than its lower turnover sites that are most likely to be put up for sale, as it follows a non-branded and an Asda-inspired "best value" pricing strategy across its newly enlarged estate.
That will certainly be more likely to attract buyers who see better value in premium sites. Future months are likely to be busy times fo0r would-be deal-makers.
