Hugh Osmond, founder of the Punch Taverns Plc pub chain, offered to buy Six Continents Plc, owner of the InterContinental and Holiday Inn hotels, for £7 billion (US$11 billion) in cash and assumed debt.
Osmond offered 36 new shares of his Capital Management & Investment Plc holding company for each Six Continents share, valuing the UK hotelier at 648 pence a share, compared with 619 pence Friday. Alternatively, investors may take 643 pence a share in cash and stock, Osmond said in a Regulatory News Service statement.
The 40-year-old Osmond, who amassed more than 100 million pounds by investing in British bars, real estate and restaurants, wants to break up Six Continents, owner of 3,200 hotels and 2,000 pubs. The acquisition would be the biggest ever in Europe's lodging and bar industries.
Shares of Six Continents were down 12 pence, or 1.9 percent, to 607 pence at 8:53am in London, giving the London-based company a market value of £5.3 billion.
Along with InterContinental and Holiday Inn, Osmond would acquire the Crowne Plaza hotels as well as Britain's fourth-largest pub chain, with venues such as All Bar One. Six Continents has businesses in almost 100 countries, from the US to China.
Osmond has said he aims to thwart the company's plan to spin off bars from hotels, and gain all the assets in one transaction.
Six Continents already has rejected approaches from Osmond.
Under Six Continents' intended spinoff, scheduled for next month, shareholders would gain 50 shares in each of the two listed companies, for every 59 Six Continents shares held. They would also be paid £700 million, or 81 pence a share.
With the division of the company, Six Continents has estimated it would reap about US$100 million in cost savings at the hotels business this year and US$10 million at the pubs company. Six Continents also is nearing the end of a five-year, US$1 billion revamp to overhaul InterContinental hotels including Le Grand, a 19th century building opposite Paris' main opera house.
Profitability at the hotels is under pressure, particularly in the US and Europe, because of faltering economies and prospect of war in Iraq, Chairman Ian Prosser has said.
Six Continents said in December, when it posted a 24 percent decline in second-half profit, that it expects corporate room rates at its InterContinental and Crowne Plaza chains to be unchanged or decline this year.
Osmond said Feb. 20 he intends to increase the value of Six Continents by breaking it up and selling parts of the business.
He is worth £134 million, according to the Sunday Times 2002 Rich List. Osmond made much of his fortune by buying and selling pubs, starting with the creation of Punch Taverns Group Ltd in 1997 and the spinoff of Punch Taverns last year.
In 1999, he led Punch Taverns Group to victory in a takeover battle for Allied Domecq Plc's 3,500 pubs, knocking out bidding rival Whitbread Plc. His £2.75 billion offer was a combination of cash, assumed debt and shares of Bass Plc, which agreed to buy about a fifth of the pubs.
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