Lemon Tree Hotels To Acquire Keys Hotels, Expects To Boost Portfolio By A Third
Lemon Tree Hotels Ltd.’s latest acquisition is expected to boost capacity by nearly a third.
India’s third-largest mid-market hotel operator said in an exchange filing that it has signed a non-binding agreement with Berggruen Hotels Pvt. Ltd. to acquire 100 percent stake in Keys Hotels, the fourth-largest operator in the category. No financial details were released as Lemon Tree has signed a non-disclosure agreement, the filing said.
The transaction, which is subject to conditions and due diligence, will help boost Lemon Tree's portfolio to 75 hotels in 44 cities with 7,322 rooms.
Amit Agarwal, an analyst with Nirmal Bang, who tracks Lemon Tree Hotels, told BloombergQuint that he awaits more clarity on the financial part of the deal. “If the company adds significant debt for this acquisition then it could be a concern given their earlier commitments.”
Keys Hotels owns seven hotels with 936 rooms in six Indian cities. In addition, it owns two land parcels for hotel development at Goa and Raipur and operates 14 hotels with 975 rooms under various agreements.
“Post-acquisition, we will have 1.5 percent of India’s total inventory of branded hotel rooms,” Patanjali Kesvani, chief managing director of Lemon Tree Hotels, told BloombergQuint over the phone. “This business will fulfill certain expectations of accretiveness.”
Lemon Tree said in the filing that it also plans to build 33 hotels with 3,389 rooms in 26 cities by financial year 2020-21.