Permira to sell Travelodge for £650m

Permira is reportedly selling its budget hotel chain Travelodge for approximately £650m, with Dubai International Capital likely to win the race after entering into exclusive talks with the European buyout firm.

Dubai International Capital, the private equity arm of Dubai Holdings, is reportedly in exclusive talks to buy Travelodge, a UK-based budget hotel chain, from Permira, a European buyout firm.

According to the Daily Telegraph, a UK broadsheet, Dubai International Capital will pay approximately £650 million (€955 million) for Travelodge, after beating off competition from rival private equity firms BC Partners, Starwood Capital and Cinven.

Permira acquired Travelodge and roadside restaurant business Little Chef in a £712 million transaction in December 2002. The businesses were bought from Compass, a UK contract catering group which sold its travel concession catering arm Select Service Partner to EQT and Macquarie Bank for £1.82 billion in April of this year.

Cinven also featured in the early running to acquire Travelodge and Little Chef in 2002, with Apax Partners and Sun Capital also showing interest, before Permira entered into exclusive talks with Compass.

Permira disposed of Little Chef in October 2005, selling the business to the People’s Restaurant Group for £52 million.

Travelodge operates 269 hotels across the UK and also has operations in Spain and the Republic of Ireland.

The Telegraph said that Citigroup is advising Dubai International Capital, while UBS is advising Permira.

Dubai International Capital, which is owned by Crown Prince Mohammed al-Maktoum, already has a number of UK assets, including Doncasters, an engineering company bought earlier this year for £700 million, and Tussauds Group, owner of the London waxworks museum, for £800 million in March 2005.

Permira and Dubai International Capital were not immediately available for comment.