Is EasyHotel Too Good To Buy?

The EasyHotel founder has urged shareholders of the company to reject a £137.8million takeover deal which the board of directors has recently agreed.

Sir Stelios Haji-Ioannou, founder of EasyHotel spoke out against the proposal:

“I find the offer from Icamap to be very low and I urge all other shareholders to take no action (ie not accept the Icamap offer) until the true value and future potential of EasyHotel can be evaluated.”

The Plimsoll analysis suggests that the offer made may not be as unreasonable as the company founder suggests. 

However acquirers in the hotel market have increasingly looked toward traditional acquisition models, whereby there is scope for immediate improvement through financial and management restructuring. EasyHotel is simply too financially strong to fall into this model.

The Plimsoll analysis of the Hotels industry shows that there are 324 such companies that are ripe for acquisition out of the top 1000 companies in the industry. These companies match a number of the following criteria:

• The Sales growth generally above the industry average
• The Company has a low financial rating
• The Company has high gross earnings
• There is a low number of shareholders
• There is a big difference between current and potential future value
• The directors fees represent a high proportion of profits
• The Average age of directors is high
• The company is privately owned
• There is a low number of directors

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