• Dalata ready to become Irish heavyweight

Irish hotel group Dalata is weighing up a potential EUR460m takeover of the Moran Bewley Hotel group. The deal could catapult Dalata, already the largest hotel operator in Ireland, into a major force in the sector, straddling the Irish and UK markets.

Shares in the acquisitive Dalata were suspended from both the Dublin and London markets, pending an announcement about the deal; local media suggest the Dalata management have been granted a 30 day exclusivity period.

Discussions are said to have been in progress since May. “Dalata’s shares will now be suspended from trading pending the conclusion of discussions in relation to the potential acquisition or the publication of an admission document for the enlarged group,” said the company in an official statement.

The deal would not be out of line with the company’s highly acquisitive approach to the market since it raised EUR265m from a March share placing. At that point, the group had 40 hotels, with all but one, the Maldron Cardiff located in Ireland. Of these, it operated 12 under leases, one under a long term operating agreement, and 27 under short term management agreements.

In June, it bought the Maldron in Parnell Square, Dublin, a hotel it has operated since 2007, and the city’s Pearse hotel for conversion to the Maldron format, spending close to EUR30m on the pair. In August, the company also announced it was looking at acquiring the Clyde Court and Ballsbridge Hotels in Dublin, both hotels it had been operating since 2012, though that deal fell through.

In September, the group purchased the Tower hotel in Londonderry, its second hotel in Northern Ireland alongside the Maldron in Belfast, again destined to rebrand as a Maldron. In October, the company paid EUR31.7m for the Clayton Hotel in Galway and Whites in Wexford.

Moran and Bewleys were combined in 2008, when Tom Moran purchased the Bewleys group in a EUR580m deal backed by substantial debt. The two have maintained a separate branding in the market since then. Bewleys operates four hotels in Dublin, plus one each in Leeds and at Manchester airport. Under the Moran brand are two four star hotels in London and one each in Cork and Dublin, plus a substantial Dublin pub, the Red Cow. The group is expected to post revenues of around EUR104m, with ebitda of close to EUR33m.

However, the company’s debts have been an issue. Moran completed a financial restructuring in 2013 that saw a fresh cash injection in return for a debt for equity swap. Lenders AIB, Bank of Ireland and Canyon Capital took significant equity stakes, in return for cutting net debt to EUR205m.

The group has been up for grabs for some weeks. In October, the Sunday Times suggested Dalata was one of three shortlisted bidders for the group, alongside Starwood Capital and Marathon Asset Management. Rothschild was managing the sale, said to have been triggered by an initial unsolicited approach from Dalata. Also in the early bidding were said to be London & Regional, which already ownes the Four Seasons in Ballsbridge, and a pairing of Goldman Sachs with Irish group Tifco.

Local media suggest that, should Dalata be successful, it may then sell Moran’s Dublin hotel and pub back to owner Tom Moran, in a EUR8m back to back deal.

Dalata’s first half figures for 2014 showed how the Irish market is recovering. Like for like revpar was up 11.4%, pushing up the margin before rent to 29.5%, from 27.6% in 2013. Full year ebitda was expected to be in the range EUR7.5-8m, excluding acquisition activity.


HA Perspective [by Chris Bown]: Dalata’s bold step could give it a dominant position in Ireland, as well as a good toehold in the UK from which to build out its Maldron brand. The sole UK representative, in Cardiff, could be joined by Leeds, Manchester and two London properties, for a start.

With a strong cash position, and the option of selling one or two Dublin properties back to Moran, Dalata ought to have few problems raising debt to cover the deal.

One issue, should the groups combine, might be the exposure to the Dublin market. Dalata currently has six Maldron branded hotels around the city, and runs as many more under other names; the deal could potentially give it five more. The city has been enjoying bumper occupancy levels and strong trading of late; something that cannot be guaranteed long term.

Goldman may have missed out on Moran Bewleys, but is already in the Irish market with Tifco, which is already involved with 14 hotels in Ireland, including Holiday Inns and Crowne Plazas. In October, the financier bought a loan package under the Project Nadal sale, giving it an interest in Radisso Blus in Dublin city centre and at Dublin airport, plus the Hilton in Kilmainham and the Arlington hotel.

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