China's Home Inns & Hotels Management Inc. Enters Definitive Agreement to Acquire Motel 168 for US $470 Million, Adding 281 Hotels in 81 Cities to Portfolio

  • Home Inns & Hotels Management
  • 05.31.11
Home Inns & Hotels Management Inc. (Home Inns, Nasdaq: HMIN) announced that it has entered into a definitive agreement to acquire 100 percent ownership interest in Motel 168 International Holdings Limited (Motel 168) for a total of US$470 million with approximately US$305 million in cash, and 8.15 million Home Inns' ordinary shares at a price equivalent to a per-ADS price of US$40.37 (each Nasdaq traded Home Inns' ADS represents two ordinary shares) to be issued at the time of closing (the transaction).

Home Inns will grant customary registration rights to the sellers in connection with the Home Inns ordinary shares issuance.

Motel 168 is one of the major branded economy hotel operators with 144 leased and operated locations and 137 franchised and managed hotels, with a total of 45,669 rooms in 81 cities across China as of today. The majority of Motel 168's portfolio is operated under the flagship Motel 168 brand, which is well-known among domestic business and leisure travelers, particularly in Shanghai and the eastern coastal regions. A selected number of locations are operated or co-operated under Motel 168's Motel 268 and Yotel QQ brands. Motel 168 generated gross revenue of $262 million in the financial year ending December 31, 2010.

The transaction represents a unique strategic combination of the portfolios of Home Inns and Motel 168, and will create one of the most geographically diverse economy hotel operations in China. Consistent with Home Inns' strategy of developing multibrands, Motel 168 will provide an attractive and complementary brand portfolio for Home Inns to increase its scale and expand its scope.

Home Inns plans to retain and operate the Motel 168 brand and leverage its proven operational expertise to enhance existing Motel 168 hotels' performance, as well as to further develop and expand the Motel 168 hotel portfolio. Home Inns does not expect this transaction to cause any deviation from its existing business development and operational plans for the Home Inns or Yitel brands.

"We are excited to have the opportunity to bring Motel 168, a well-established domestic economy hotel chain, into Home Inns' portfolio, and look forward to working with the Motel 168 management team to ensure timely closing of the transaction, smooth post closing integration, and future growth of the business," said Mr. David Sun, Home Inns' chief executive officer. "We are confident that through this transaction, we will create long-term value for our shareholders, who will include funds managed by Morgan Stanley Real Estate Investing (MSREI) and other previous shareholders of Motel 168."

"We believe in the attractiveness of the China economy hotel industry and Home Inns' long-term leadership position," said Mr. Hoke Slaughter, managing director and head of Morgan Stanley's Real Estate Investment Business in Asia.

Home Inns intends to finance the cash portion of the transaction through balance sheet cash on hand and one or more sources of new debt financing. Home Inns has received a term credit facility financing commitment for up to $300 million from Credit Suisse and J.P. Morgan.

The transaction has been approved by the boards of directors of Home Inns and Motel 168, and Motel 168's shareholders, and is expected to close, subject to customary closing conditions and Chinese regulatory approvals, in the fourth quarter of 2011.



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