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British hotel giants to link?
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February 5, 1999: 9:54 a.m. ET
Stakis shares rise as rival Ladbroke considers a takeover
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LONDON (CNNfn) - Shares of Glasgow-based hotel group Stakis soared for the second straight day Friday on news it had received a takeover bid from British rival Ladbroke worth about $1.8 billion.
Ladbroke is an operator of betting shops, casinos and hotels that owns exclusive rights to the Hilton Hotel name outside the United States.
Ladbroke confirmed Friday it is in talks with Stakis for a possible offer of about 140 pence a share.
On Thursday, Stakis shares soared 23 percent to 137 pence after the company admitted it had been approached by an unnamed bidder.
In a statement Thursday prompted by the mounting speculation of a takeover, Stakis said: "In light of the recent share movement Stakis has received an approach that may or may not lead to an offer for the company in the region of 140p." In the week prior to the statement Stakis stock had risen about 10 percent.
On Friday afternoon in London, Stakis shares were up 6-1/2 pence, or 4.7 percent, at 142, while Ladbroke had eased 2.4 percent, or 5-3/4 pence, to 233-1/4.
The offer underlines a trend towards consolidation in the British hotel sector where cost-cutting imperatives are exerting pressure on companies to beef up their market presence through mergers.
For Ladbroke, a link-up with Stakis would come at a propitious moment. Late last year Ladbroke sold its Coral betting shops shortly after buying them because British regulators blocked the purchase, saying it would weaken competition in the gambling industry.
The Times of London said that while both companies are intent on completing a deal, a Ladbroke offer could draw other suitors into a bidding skirmish.
According to the newspaper, Accor of France, operator of the upmarket Hotel Sofitel, and U.K.-based Whitbread, a brewing and leisure giant, could riposte with offers of their own.
Stakis operates 53 three and four-star hotels, about 22 regional casinos, and 63 Living Well fitness clubs. At present, the hotel division accounts for more than 75 percent of the company's sales.
Stakis is keen to expand into continental Europe through acquisitions of hotels and casinos.
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Stakis
Ladbroke
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