Monday, February 8, 1999 Published at 11:29 GMT
Business: The Company File
Ladbroke offers £1.16bn for Stakis
The Stakis name will be replaced by Hilton
The hotel-to-betting group Ladbroke, which runs the Hilton hotel chain outside the US, has put in a formal cash-and-share bid for one of Britain's largest hotel groups, Stakis.
The deal has been backed by Stakis' management after Ladbroke raised its original offer. However, there is still a possibility that the offer could still be trumped by another bidder.
In a deal worth £1.16bn, ($1.8bn), Ladbroke is offering to pay 146p a share, which includes a dividend which is due to be paid to Stakis shareholders.
The offer is a premium of 32% on the price at which Stakis' shares were trading before the deal was announced.
However, at 1125 GMT Stakis' shares had jumped another 10% to 155.5p, on expections that a higher offer may emerge.
Ladbroke's shares were up 31p at 267p.
If the deal goes through, it will make Ladbroke's Hilton International division Britain's second largest hotel group behind Granada.
In an statement published on Monday morning, Ladbroke said the combination of the two businesses represented "an excellent complementary business mix and geographic fit across all operations".
The 54 Stakis hotels across the UK will be linked with Ladbroke's 170 Hilton hotels in 50 countries - 38 of them in the UK. In addition to a string of health clubs, Ladbroke will add 22 Stakis casinos - 19 regional, one in London, one on the Isle of Man and one in Gibraltar - to its five existing casinos.
If the deal is successful, the number of Hilton hotel rooms in the UK will double from 8,093 to 16,147.
Stakis chief executive David Michels, who has been responsible for the group's resurgence this year, will become chief executive of Hilton International and join the Ladbroke board.
However some jobs are likely to go. Stakis' Glasgow headquarers, which employs 200 people, is likely to bear the brunt of any cuts. The two groups plan to save £16m a year through the merger.
The deal could spark a wave of mergers in the hotel industry and spark life into a sector which has been out of favour with investors for sometime.
Ladbroke, which is also the UK's largest bookmaker with 1,900 shops, is keen to expand, having had its acquisition of the Coral betting chain vetoed by the government.
Selling Coral again allowed Ladbroke to build up a war chest for future deals. Last year Ladbroke was also outbid by leisure industry rival Bass for Inter-Continental Hotels.
Ladbroke confirmed last week that it was talking to Stakis about a takeover, thought then to be worth around 140p a share.
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