(Bloomberg) — Management of Greentree Hospitality Group Ltd. According to people familiar with the matter, the New York-listed Chinese hotel chain is contemplating a deal with a buyout firm for a proposal to take it private.
CICC Capital is working with the firm’s management on a potential buyout bid, the people said, asking not to be identified while discussing confidential information. The people said the consortium is discussing a potential offer at a premium of at least 30% to Greentree’s recent share price.
GreenTree raised nearly $143 million after valuing its US depository shares at $14 per share in a 2018 US initial public offering. The stock hit an all-time high of $25.10 per share in June of that year. As the pandemic weighs on the travel industry, its shares have fallen nearly 60% over the past 12 months, giving the hotel chain a market value of about $540 million.
Greentree rose more than 10% in pre-market trading on Thursday following a Bloomberg News report.
People said the discussions are preliminary and no final decision has been taken on a possible take-private offer. A Greentree representative declined to comment, while a spokesperson for CICC Capital did not immediately comment on the matter.
Travel-related businesses in China, including hotel operators, are facing uncertainty as the outbreak of the COVID-19 Omicron version has led to harsh lockdowns for millions of people in areas such as Shanghai and Jilin province, with no end in sight. There has been a sharp decline in the number of passenger trains and aircraft.
Established in 2004, the Shanghai-based franchise hotel operator offers accommodation including hotels, guest houses and serviced apartments and according to its website has more than 5,500 accommodations in over 340 cities.
Greentree reported net income of 185.7 million yuan ($28.2 million) for the first nine months of 2021, a 5.6% increase from the same period a year ago.
Zhejiang New Century Hotel Management Company was privatized last year by a consortium led by buyout firms in a deal valued at about $670 million.
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