Media reports indicate that Lemon Tree Hotels has entered into a non-binding agreement with Berggruen Hotels to acquire Keys brand of hotels in India. In a disclosure to the Bombay Stock Exchange (BSE) recently, Lemon Tree has disclosed to have signed a non-binding term sheet for 100 per cent direct and indirect acquisition of the shares of Keys Hotels.
Important to note here that Keys Hotels is staring at a debt in excess of INR 160 crores. The final approval of the deal is expected to go through after due diligence and obtaining requisite approvals.
Lemon Tree has had a fantastic run in the recent past and has raked up one of the best valuations in the stock market, since it went public. The Patu Keswani-promoted company plans to invest a hefty INR 3000 crores in the next few years to strengthen its inventory. Keys Hotels, provided the deal sails through, will provide the company a similar product which may require a very minor tweaking before it is thrown open for public consumption. It is likely to add weight to Lemon Tree’s standing in the mid-segment market.
For the uninitiated, Keys Hotels currently owns and manages 21 hotels with 1911 rooms in 19 cities. It owns 7 of these hotels. These hotels are under three product categories of Keys Prima, Keys Select and Keys Lite. Keys owns two hotels with 381 rooms in Bangalore, Pune (101 rooms), Trivandrum (101 rooms), Ludhiana (95 rooms), Kochi (151 rooms), and Vizag (long lease 107 rooms). The hotel company further owns two land parcels in Raipur and Goa.