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Safestay invites bids after ‘highly conditional’ takeover approach
17 September 2021, 07:54
The board of the hostel company is launching a strategic review, which could result in the business being sold.
Safestay has been the target of a “very early stage and highly conditional” approach from a potential buyer, bosses of the hostel company revealed as they launched a review of the business.
Directors said the review could lead to them launching a formal sales process, and invited bids from potential suitors.
The firm has been severely hit by the pandemic, which brought lockdowns at worst and travel restrictions at best.
It has focused on cutting costs, tapping into Government support and renegotiating rent with landlords.
It also sold two parts of the business to raise nearly £17 million – money it says will allow it to compete when the market recovers.
It is a position that has turned the head of at least one potential bidder.
The company said on Friday: “The board has also received a very early stage and highly conditional approach from a party in relation to a possible offer for the issued and to be issued share capital of Safestay.”
The board said it will review strategic options, including selling the company.
It has appointed PwC as an adviser, and said bidders should contact the consultants.
Safestay said it is not currently in any discussions with any bidder about an acquisition.
Chairman Larry Lipman said: “From May we began reopening our portfolio of premium hostels and we have seen occupancy improve month on month in line with internal forecasts.
“Following the two disposals earlier this year for a combined total of £16.8 million, we reduced borrowings by 35% and injected £6.3 million in cash to support the transition back to being fully operational.
“Individual and group bookings are coming in for the winter and for 2022 and underpin our confidence of returning to pre-Covid levels of trading.
“We believe strongly in the appeal of the Safestay brand. However, we recognise that this is a natural point, as we relaunch the business post-Covid, to undertake a strategic review, in order to maximise value for all shareholders.
“This process will reveal whether there is additional value for shareholders compared to the upside we believe we can deliver.”