Ireland’s biggest hotel operator Dalata has announced its intention to acquire most of the Moran Bewley’s Hotel Group for €455 million. The deal will be subject to clearance from competition authorities, and shareholder approval at an egm on January 5th.
Dalata is acquiring nine of the Moran hotels, comprising 2,506 rooms in Ireland and Britain. The transaction does not include the iconic Red Cow Moran Hotel and adjoining Red Cow Inn in south west Dublin, which will remain under the control of Limerick businessman Tom Moran and his wife Sheila Moran.
If the deal is allowed to proceed, it is understood that Dalata will not use the Bewley’s name but will launch a new brand to sit alongside its existing three-star Maldron symbol.
Dalata plans to issue 18.3 million new shares at €2.75 apiece to help fund the deal. This transaction will result in it having fully invested the €265 million in proceeds it raised from its stock market IPO earlier this year.
Dalata chief executive Pat McCann said the deal would be “transformational” for the company, which is listed in Dublin and London. “It is a business we have admired for a long time and the acquisition is a rare opportunity to acquire a large, well-invested portfolio of hotels,” he added.
The Moran hotel group is one of the most profitable chains in the country. In the 11 months to the end of December 2013, the company made an operating profit of €19.1 million on revenues of €77.8 million.
Acquisition
However, its near €570 million acquisition of six Bewley’s hotels from
Bert Allen
almost seven years ago weighed on the group when the Irish economy crashed in late 2008. The company agreed a major financial restructuring last year that resulted in its lenders taking equity in the business.
A sale process was initiated recently by shareholders after Dalata tabled a bid of more than €400 million.
Mr Moran said Dalata was acquiring “a fabulous portfolio of hotels”, all of which he had been “very proud” to own and operate.
“I know that with this sale Dalata haven’t simply acquired bricks and mortar but an excellent group with an impressive team of people at its centre,” he said, thanking all of his staff for making the hotels “such a valuable asset”.
Mr Moran said he looked forward to “exploring new opportunities” at the Red Cow complex.
The deal will result in Dalata acquiring five hotels in Ireland and four in Britain.
In Ireland, the properties involved are the Silver Springs in Cork, and the Bewley’s hotels in Ballsbridge, Dublin Airport, Leopardstown, and Newlands Cross.
Existing chain
Dalata’s company-owned chain includes various Maldron hotels, the Clayton in Galway and Whites of Wexford. Its lease agreements and management contracts include the neighbouring Clyde Court and Ballsbridge hotels, Citywest in Saggart and Aghadoe Heights Hotel & Spa in Kerry.
Dalata said annual pre-tax cost synergies of €2.5 million to €3 million will be achieved in the second full year after completion of the deal, which is expected in the first quarter of 2015.
It sees economies of scale in a range of areas, including sales and marketing, and a clustering of some back of house functions in certain cities.
The enlarged Dalata group is expected to have a market share of about 9 per cent in Ireland. Dalata said it would “continue to look at opportunities to acquire further hotels in Ireland as well as review new build opportunities”.
It is in “advanced discussion” to acquire another hotel here and it will also look at leasing additional properties. As a result of recent acquisition activity and strong trading, Dalata has increased its Ebitda (earnings before interest, tax, depreciation and amortisation) guidance for this year to between €8.1 million and €8.3 million.
