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Carlyle, Sequoia, Actis back $688m 7 Days take-private deal

1 Mar 2013

7 Days Inn BeijingA Carlyle Group-led consortium has agreed a $688m take-private deal for Chinese budget hotel chain 7 Days after upping its bid by nine per cent.

The buyout group, which includes Sequoia Capital, Actis and company co-chairmen Boquan He and Nanyan Zheng, had previously offered $635m in September 2012.

Actis is an existing shareholder in the business, while Carlyle and Sequoia are new investors. Warburg Pincus is also an investors in the company, but is not part of the buyout consortium.

The $4.60 per share deal represents a 30.6 per cent premium over the closing price on September 25, the last day before the going-private proposal was announced.

A $120m committed loan facility will be used to back the acquisition, with the remainder provided as cash from the consortium members.

7 Days said it expected the deal to close during the second half of this year.

Warburg owned 16 per cent of 7 Days at the end of March 2012 according to a filing with the US Securities and Exchange Commission, while emerging markets investor Actis held 11.6 per cent.

Co-chairmen Boquan He and Nanyan Zheng held a 32.7 per cent interest, the filing shows.

7 Days first became part of Warburg’s portfolio through a $25m stake purchase in 2006, which was repeated a year later.

In 2008, Actis China and Warburg Pincus Asia invested an additional $65m for an undisclosed stake.

Carlyle picked up a controlling 49 per cent stake in Chinese designer hotel operator Mandarin Hotel Holdings in July, in a bid to tap burgeoning middle class and domestic consumption in the world’s second largest economy.

The firm’s Carlyle Asia Partners III vehicle bought the stake and has subsequently become the largest shareholder in the business.

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