Home Inns & Hotels Management Inc, China's biggest budget hotel chain by number of rooms, announced Friday it had bought Motel 168 International Holdings Limited for $470 million.
The payment includes $305 million in cash and 8.15 million Home Inns ordinary shares at a price equivalent to a per-ADS (American depositary share) price of $40.37, the Nasdaq-listed company said in a statement on its website.
The deal is subject to Chinese regulatory approval and is expected to close before the end of this year.
Home Inns plans to retain the Motel 168 brand and further develop and expand the Motel 168 hotel portfolio, CEO David Sun said.
Motel 168, with its flagship Motel 168 brand as well as Motel 268 and Yotel QQ brands, announced gross revenue of $262 million for the 2010 financial year.
Home Inns, already China's largest budget hotelier, will have over 1,000 hotels nationwide after the acquisition of Motel 168, China's fifth largest budget hotel operator, and its market share will increase from 17 percent to 22 percent, even more than the total of China's second largest (7 Days Group Holdings Limited) and third largest (Jinjiang Inn Co) budget hotel operators, according to tourism research agency ENTravel Inc.
Dai Bin, president of China Tourism Academy, said the acquisition will have a far-reaching influence on the scale and brand-oriented development of China's hospitality sector.
"The acquisition will widen the gap between Home Inns and its competitors," Hou Tao, vice president of ENTravel Inc, told the Global Times on Sunday.
