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China's BTG Hotels to acquire economy hotel chain Homeinns for US$1.7b

[HONG KONG] China's BTG Hotels Group said it will acquire domestic rival Homeinns Hotel Group for around 11 billion yuan (S$2.4 billion), saying that the economy hotel chain will round out its portfolio of brands.

State-owned BTG will pay US$35.80 in cash for each American depository share of the company, a 19 per cent premium to the last ADS closing price on June 10.

Homeinns' ADS jumped 7.3 per cent to US$34.5 after the announcement. The company, which has started trading on the Nasdaq in October 2006, will be delisted.

China's hotel industry is consolidating amid fierce competition and a slowing economy.

Homeinns, which owns 2,787 outlets under five brands, posted a 57 per cent drop in net profit in the first nine months of the year.

BTG Hotels said it will fund the acquisition through a loan facility of up to US$1.2 billion from the Industrial and Commercial Bank of China Ltd.