Home Inns & Hotels Management Inc (NASDAQ: HMIN), China's second biggest budget hotel chain by number of rooms, will spend $470 million taking over Shanghai Motel Management Inc from Morgan Stanley and other shareholders, said Home Inns & Hotels CEO Sun Jian.
The price, $470 million for a 100% stake, was well below the $1 billion Morgan Stanley had asked for its 60% stake in Shanghai Motel Management Inc, also known as Motel 168. Home Inns & Hotels will pay $305 million in cash and the remainder in 8.15 million ordinary shares at $20.185 apiece.
Morgan Stanley was frustrated with the investment in Motel 168 because it had not been able to go public due to the complicated stock ownership, people close to the deal said. "Part of it [the $470 million deal] will be done in Home Inns & Hotels shares that are highly likely to gain in value in the future, so it is not a bad deal for Morgan Stanley."
Motel 168, China's fourth biggest branded budget hotel chain by number of rooms, was founded in 2003. Morgan Stanley purchased a 20% stake in it for $20 million in 2005, when Motel 168 had just 16 hotels. It later increased the holdings to around 60% for an undisclosed investment. Now it has 281 hotels with its total asset evaluated to be worth $1.76 billion. Excluding the franchises, it has 144 hotels valued at $900 million.
Home Inns & Hotels currently operates 848 hotels with 97,321 rooms. It posted $115.5 million in revenues in Q1 2011, up 10.8% from a year earlier.
Motel 168 posted $262 million in revenues in 2010.
The price, $470 million for a 100% stake, was well below the $1 billion Morgan Stanley had asked for its 60% stake in Shanghai Motel Management Inc, also known as Motel 168. Home Inns & Hotels will pay $305 million in cash and the remainder in 8.15 million ordinary shares at $20.185 apiece.
Morgan Stanley was frustrated with the investment in Motel 168 because it had not been able to go public due to the complicated stock ownership, people close to the deal said. "Part of it [the $470 million deal] will be done in Home Inns & Hotels shares that are highly likely to gain in value in the future, so it is not a bad deal for Morgan Stanley."
Motel 168, China's fourth biggest branded budget hotel chain by number of rooms, was founded in 2003. Morgan Stanley purchased a 20% stake in it for $20 million in 2005, when Motel 168 had just 16 hotels. It later increased the holdings to around 60% for an undisclosed investment. Now it has 281 hotels with its total asset evaluated to be worth $1.76 billion. Excluding the franchises, it has 144 hotels valued at $900 million.
Home Inns & Hotels currently operates 848 hotels with 97,321 rooms. It posted $115.5 million in revenues in Q1 2011, up 10.8% from a year earlier.
Motel 168 posted $262 million in revenues in 2010.
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