News17 Sep '21
Alliance News) - Safestay PLC on Friday said it will review its strategic options including a possible sale of the company, after receiving an early approach over a possible takeover.
Shares surged 21% to 24.15 pence in London at the open on Friday, giving the company a market capitalisation of GBP15.8 million.
The London-based company, which operates city centre hostels across Europe, said the strategic review would aim to maximise value for shareholders and better position itself for growth. The review will consider a sale among other options.
Safestay has received "a very early stage and highly conditional approach from a party in relation to a possible offer."
Safestay was hit hard by the pandemic, with revenue slumping 74% in 2020 and its pretax loss widening to GBP10.1 million. Since then, the firm sold its Edinburgh branch to A&O Hotels & Hostels GmbH for GBP16 million, and a leasehold site in Barcelona for EUR900,000. In addition, Safestay cut costs, renegotiated rental terms, and took part in government support schemes.
Chair Larry Lipman said: "Individual and group bookings are coming in for the winter and for 2022 and underpin our confidence of returning to pre-Covid levels of trading. We believe strongly in the appeal of the Safestay brand.
"However, we recognise that this is a natural point, as we relaunch the business post-Covid, to undertake a strategic review, in order to maximise value for all shareholders. This process will reveal whether there is additional value for shareholders compared to the upside we believe we can deliver."
Safestay has appointed PricewaterhouseCoopers as financial adviser for the strategic review and formal sale process.