(Reuters) - Swedish hotelier Pandox (PANDXb.ST) has agreed to buy Britain’s Jurys Inn hotel chain as part of an 800 million pound ($1.1 billion) deal with private equity investor Lone Star.
The deal is part of an expansion push in Britain after last year’s vote to leave the European Union boosted the popularity of so-called staycation holidays for Britons and resulted in a drop in the pound that made the country more appealing to foreign tourists.
“The acquisition fulfils all Pandox’s strategic criteria regarding countries, cities and locations, as well as size, segment and profitability,” Pandox CEO Anders Nissen said in a statement.
Pandox is acquiring 20 Jurys Inn hotels to be run by Middle East and European hotels operator Fattal, plus one other property that it will operate itself. Pandox is paying 680 million pounds for its part of the Lone Star deal, which also involves Fattal buying rights to operate 16 other properties for 120 million pounds.
The portfolio is expected to contribute about 450 million Swedish crowns ($53.3 million) in net operating income and 200 million crowns in cash earnings by 2018, provided the deal closes before the end of this year, Pandox said.
With this deal, its second biggest, Pandox will gain significant market presence in the UK and Ireland, it added.
Pandox currently has 122 hotels spanning 11 countries, including Norway, Finland and Denmark, for a total of about 27,000 rooms.
The company will finance the deal with bank loans and a 120 million pound ($160.4 million) loan from Fattal.
Reuters reported in late October that Pandox was among a group of bidders preparing binding offers for Jurys Inn.
($1 = 8.4510 Swedish crowns)
($1 = 0.7482 pounds)
Reporting by Thyagaraju Adinarayan; Additional reporting by Marta Frackowiak in Gdynia; Editing by David Goodman