Hotel chain sold for £120m

A Japanese financial services group said today it had snapped up UK hotel operator Menzies for £120m (€169.4m).

Nikko Principal Investments Ltd (NPIL), the European merchant banking arm of Tokyo-based Nikko Cordial Corporation, said it had bought the four-star hotel chain as a potential acquisition vehicle.

Nikko said it intended to build on Menzies’ successful growth and to use it as “a platform for further consolidation in the UK hotel market”.

Menzies, based near Derby, was set up in 1992 and owns and runs 14 hotels throughout the UK.

The company, run by chairman and founder Nick Menzies, has invested more than £24m (€33.9m) in the last four years in refurbishments and capital improvements.

It secured a £72m (€101.6m) financing package from the Royal Bank of Scotland in May 2003.

The hotels are in Oldham, Walsall, Edinburgh, Bournemouth, Woburn in Bedfordshire, Coventry, Salcombe in south Devon, Derby, Woodford Bridge in London, Newcastle, Stourport-on-Severn in Worcestershire, Bath and Stratford-upon-Avon.

NPIL’s Simon Oakland and Mark Clarke will become directors of the company alongside Mr Menzies and other senior managers, who will be shareholders in the new business.

Mr Menzies said the deal would take the business “to its next level”.

“Nikko has an excellent reputation for supporting its investment companies and helping them fulfil their potential,” he said.

“The UK four-star hotel sector remains fragmented and we believe there are significant opportunities for us to lead the consolidation of the sector and build value.

“I look forward to working with the Nikko team to achieve this.”

NPIL chief executive Brian Berry said Menzies represented “an exciting opportunity for Nikko to build a substantial position as an owner/operator of upscale hotels within the UK”.

“With our financing expertise and financial resources and the high quality business and strong management team that Nick has assembled at Menzies, we believe we have acquired an excellent platform from which to achieve this,” Mr Berry said.