Whitbread Bids Pounds 200m for David Lloyd
Cope, Nigel, The Independent (London, England)
Whitbread, the pubs and restaurant group, continued its expansion into the leisure sector yesterday when it announced a pounds 200m agreed bid for David Lloyd Leisure, the tennis clubs group run by the former Davis Cup star. The deal comes just a day after Whitbread paid pounds 180m for 16 Marriott hotels, making the company the UK's third-largest hotel operator.
Whitbread's 400p per share offer for David Lloyd Leisure values Mr Lloyd's personal shareholding, including options, at pounds 21m. Other directors and family members, including Mr Lloyd's brother John Lloyd, also stand to make substantial gains.
Commenting on the sale of a business he founded in 1980 and floated on the stock market in 1993, Mr Lloyd said: "I couldn't play singles. I had to play doubles because I always needeoke glowingly of this one, even though many in the City believe Whitbread has paid too much. "The growth in the health and fitness sector is the best we have identified," Mr Jarvis said. "With this transaction, we are buying the opportunity to lead this market in this country. David's business is miles ahead of anyone else's."
City opinion was divided on the deal, which involves Whitbread paying pounds 200m for pounds 40m of assets, with the rest being attributed to goodwill. One City analyst said: "To say it is a full price would be an understatement." Charles Mason of BZW described the deal as "very expensive". The bid price represents a 29 per cent premium to the share price last Friday, when David Lloyd confirmed that it was in bid talks. The shares were priced at 150p when the company was floated two years ago.
David Lloyd shares rose 31p to close at 395, while Whitbread slipped 4p to 618p at the close.
David Lloyd Leisure has 16 clubs, with another due to open in Cardiff in October. The company had planned to open two or three new clubs a year.
That expansion programme will now be increased to five or six a year. Mr Lloyd said there was scope for up to 50 in the UK and is confident that the backing of Whitbread's financial muscle will prove vital. Without a deal, it was expected that David Lloyd would have needed a rights issue in the next year to fund growth plans. …