The Mantra Group Ltd (ASX: MTR) share price is up 17 per cent to $3.77 today after the hotelier revealed it is subject to a conditional $3.96 per share takeover offer from French hotel group Accor.
Mantra Group is behind the Mantra, Peppers, and Breakfree brands and its board and shareholders now have to weigh up whether the $1.2 billion offer at a generous 22 per cent premium to its last closing price is sufficiently tempting to do a deal.
Notably, Mantra has also just done a $52.5 million deal to acquire the popular Art Series Hotels in a move that is expected to lift underlying EBITDA by $7 million over FY 2018.
The stock recently changed hands for less than $3 and the group has a solid track record of earnings growth that has been assisted by a weaker Australian dollar over the past couple of years. This has also boosted overseas visitor numbers, while encouraging Australians to holiday at home at popular east coast destinations where Mantra is well positioned.
The weaker Australian dollar is also likely to have encouraged an overseas bid and this afternoon the shares are selling for 20 cents beneath the takeover offer, suggesting there may be some quick profits available to deal-backing speculators.
There's also the possibility Accor is coaxed into coming back with a higher offer, or that a rival bidder emerges with a better offer as Mantra's assets look attractive given the strength of tourism as a sector across the local economy.
I expect a deal will be done, although would not suggest buying the shares today in pursuit of a quick profit as if no deal is done the share price will fall quickly.
Elsewhere, shares in Event Hospitality & Entertainment Ltd (ASX: EVT) as the group behind the Rydges and QT Hotel brands are up 1.5 per cent today and its hotels business is also attractive to large overseas suitors chasing acquisitive growth.
