Homeinns Hotel Group received a buyout offer from investors including Ctrip.com International Ltd. as China’s biggest operator of economy hotels joined a dozen U.S.-listed mainland companies that are seeking to go private.
The American depositary receipts rose 3.9 percent to a six-month high of $31.35 on Thursday in New York. The $1 billion offer of $32.81 per ADR from a group of buyers, which also include Homeinns’ co-chairman and chief executive officer, represents an 8.8 percent premium over Wednesday’s closing level.
Homeinns had lost 9.2 percent over the past year before the announcement as an expansion race among budget hotel chains during China’s economic slowdown crimped its revenue growth. A record 13 firms have announced similar bids this quarter, according to data compiled by Bloomberg, as a rally in China’s mainland market this year has boosted the average stock valuation to a five-year high.
“This is a well run company with a strong brand in China,” Eric Brock, a Boston-based money manager at Clough Capital Partners, which oversees about $4.4 billion, said by e-mail. “I imagine they will try to relist in Shanghai or Hong Kong where investors more familiar with the companies’ business opportunities would likely place a higher valuation on the shares.”
The company would become the second hotel operator to leave the U.S. stock market after smaller peer 7 Days Group Holdings Ltd. delisted its shares in 2013. The buyout group includes BTG Hotels (Group) Co., Poly Victory Investments Ltd., two co-founders, its CEO David Sun and Ctrip, which operates China’s biggest travel-booking website, Shanghai-based Homeinns said in a statement. The buyers, who will fund the deal with loans or equity capital, already own about 35 percent of the company’s outstanding share, it said.
Homeinns traded at 17 times forward profit as of last week, compared with a multiple of 42 for the yuan-denominated shares of Shanghai Jinjiang International Hotels Development Co. listed in the domestic market.
Four other companies, including Internet data-center service 21Vianet Group Inc. and social networking website Renren Inc., said this week they have received offers to take them private.
The Bloomberg China-US Index for the most-traded Chinese companies in the U.S. gained 1.1 percent to a record 138.50. China Lodging Group Ltd., which also runs hotels, rallied 7.9 percent to $29.02, the highest level in 15 months.