Canadian hotel owner InnVest REIT's management is backing a friendly $2.1-billion takeover by a private company backed by money from Hong Kong.
Bluesky Hotels and Resorts is offering $7.25 cash for each unit of InnVest Real Estate Investment Trust, which trades on the TSX. That's a premium of about 33 per cent higher than the $5.47 price point where InnVest was trading before the takeover news.
The $2.1-billion price tag includes debt.
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InnVest owns 109 hotels across Canada, including stakes in some iconic names, such as Toronto's Fairmont Royal York Hotel.
Most of InnVest's holdings come via a 50 per cent stake in Choice Hotels Inc, which in turn owns hotels run under the brand names Comfort Inn, Delta, Travelodge, Radisson, Best Western and Holiday Inn.
Bluesky is incorporated in Ontario but financed by money from Hong Kong. Bluesky has put down a $100-million deposit for the deal, and InnVest has promised to give Bluesky the opportunity to match a superior offer if one arises and pay a $32-million fee if the deal doesn't close under certain circumstances.
The move is just the latest in a recent round of consolidation in the hotel space, which has seen its margins shrink in the face of changing consumer tastes, especially the rise of Airbnb for short overnight stays by tourists.
Last year, Chinese private equity firm Anbang lost out on a bidding war for Starwood hotels against U.S. chain Marriott, which ended up offering more.
And also last year, French hotel chain Accor bought the parent company of Fairmont, Swissotel and Raffles.