Premier Inns and Travelodge Merger Talks Over

20th March 2008 (Last Updated March 20th, 2008 09:10)

Whitbread has ended talks with Travelodge about a possible merger with its Premier Inn hotel chain. The merger would have created a super chain of 850 properties across the UK, worth up to £3bn with a share of 65 percent of the country's budget hotel market. In a statement t

Whitbread has ended talks with Travelodge about a possible merger with its Premier Inn hotel chain.

The merger would have created a super chain of 850 properties across the UK, worth up to £3bn with a share of 65 percent of the country’s budget hotel market.

In a statement to the stock market, Whitbread confirmed preliminary talks had taken place, but they had now concluded with no further action to be taken.

According to The Times newspaper, Whitbread’s chief executive Alan Parker actively pursued Travelodge, with an offer of £900m.

Although Travelodge had agreed in principle to the offer, Whitbread’s board did not back Parker, the newspaper says.

Travelodge chief executive Grant Hearn says owner Dubai International Capital (DIC) is “naturally obliged” to consider all offers.

“The proposed deal was unexpected and with terms which it appeared might have guaranteed a significant return to our investors and be in the best interests of our business,” he says.

“We and DIC are naturally obliged to consider such an offer, but would only proceed if we felt it was in the interests of all stakeholders.”

A Whitbread spokesman says the talks were begun by an approach by broker Goldman Sachs on behalf of DIC.

By Elizabeth Clifford-Marsh