The independent directors of Jarvis Hotels have agreed the terms of a £159m cash offer for the company from founder John Jarvis and co-director Richard Thomason.
Jarvis announced his intentions of taking the company private in late October.
The recommended cash offer of 145p per share values the company at £159m, or £228m including debt, and represents a premium of 42% over the average share price over the six months to 4 July.
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The offer will be made by IBI Corporate Finance (a subsidiary of the Investment Bank of Ireland) on behalf of Kayterm, a company set up as a bidding vehicle by Jarvis, Thomason and members of venture capital firm Lioncourt Capital.
The offer document will be sent to Jarvis shareholders within 28 days and the offer is expected to close in early January.
Major shareholder Trefick, which owns 29.7% of Jarvis's stock, has pledged to accept the offer.
The announcement of the offer today coincided with the unveiling of the group’s interim results for the 28 weeks to 11 October.
Continuing tough conditions led to a pre-tax profits slump of 56.4%, down from £11.7m to £5.1m before exceptional costs of £1.3m from a head office restructure, which is expected to generate annual savings of £1.3m.
Post-exceptional profits fell by 61% to £4m, from £10.1m, while turnover slipped slightly by 1.9% to £87.6m, from £89.3m for the same period of 2003.
Although the weak corporate market has been offset by an increase in domestic leisure customers, this has led to lower rates and higher servicing costs, Jarvis said.
Occupancy grew from 70% to 70.5% but average room rate dropped to £50.17 from £52.29 and revenue per available room decreased by 3.3% from £36.59 to £35.38. Both food and beverage turnover increased.
The fall in profits also reflects higher rentals, of £5.7m, on the nine properties involved in a £150m sale-and-leaseback deal last November.
In August, the group sold the Jarvis Aberdeen hotel for £2.85m and has sold the Jarvis Crewe hotel since the end of the half-year. Another three properties have been put on the market.
by Angela Frewin
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