Home Inns & Hotels
Management has agreed to
acquire the Top Star hotel chain, which consists of 26 economy hotels with
approximately 4,200 rooms across 18 cities in China.Established in 2005,
Top Star is a popular economy hotel brand among domestic business and
leisure travelers in China. The addition of these hotels will allow Home
Inns to further expand its hotel chain to more than 320 hotels in more than
80 cities, and to leverage both Home Inns’ and Top Star’s customer bases.
Home Inns’ consideration for the acquisition will consist of the
assumption of approximately RMB 172 million in debt, which Home Inns plans
to repay shortly after the completion of the acquisition, the issuance of
up to 655,831 Home Inns’ ordinary shares (which equals 327,916 of Home
Inns’ American depositary shares), as well as cash payment of up to RMB 88
million, for aggregate value of up to RMB 340 million if all conditions and
targets are met by Top Star.
Home Inns plans to retain the Top Star brand while adding Home Inns’
logo to the acquired hotels. Home Inns expects to control the operation of
the Top Star hotels beginning November 1, 2007, and the closing of the
acquisition is expected to occur by the end of 2007. Home Inns plans to
leverage its customer network, technology platform as well as operations
expertise to improve the earnings and cash flow of the Top Star hotels in
the near future.
“We are extremely excited to bring into our portfolio an additional 26
hotels,” said David Sun, Home Inns’ Chief Executive Officer. “By doing so,
we are solidifying our leadership position in China’s economy hotel market.
In addition, we are demonstrating our ability to grow rapidly through
acquisition as well as organically. We are committed to achieving great
performance at the Top Star hotels that we are acquiring, just as we do at
all of our Home Inns hotels.”