(Sharecast News) - Safestay announced the end of its strategic review and formal sale process on Wednesday, having announced its intention to consider its strategic options - including the possibility of a sale of the business - in September.
The AIM-traded hostel operator said during the strategic review, a number of "constructive discussions" were held with interested parties, and several indicative proposals were received.
Further discussions resulted in a non-binding conditional expression of interest from a bona fide third party, in cash at a significant premium to the current share price.
"Having considered the expression of interest, the majority of the board concluded that they would have recommended shareholders accept an offer made at the expression of interest price," the directors of Safestay said on Wednesday.
"However, following discussions with certain shareholders of the company, whilst a number indicated that they would be prepared to commit to accepting such an offer at the expression of interest price, it became clear that there was not sufficient shareholder support to satisfy the third party making an announcement of a firm intention to make an offer for the company under the Takeover Code."
The board said it had notified the third party that their expression of interest was rejected, adding that all discussions with interested parties had now ceased, and there were no ongoing discussions.
"As a result, the board has decided to terminate the formal sale process with immediate effect."
The firm's board said it had also decided to end the strategic review.
"The board believes strongly in the appeal of the Safestay brand and will continue to explore all avenues of alternatives and opportunities in what remains a challenging and unclear post-Covid environment.
"In total, trading has been in line with the board's expectations since the company's last guidance issued on 28 September."
Safestay noted that its hostels only fully reopened in July, but added that the board's "belief in the brand strength" was reinforced by the trading performance of the hostels since reopening, delivering "significantly more" hostel revenues than 2020, while hostel EBITDA was returning to a positive position in the later months of the year before trade was again impacted restrictions and lockdowns caused by the Omicron variant.
"The board believes that as travel restrictions are lifted across Europe, the desire for travel will return, and the key locations and appeal of Safestay will see a strengthening of occupancy levels across our sites.
"Seasonally the company is in a quieter period, where historically management has reduced the operating cost base to align costs to the revenues coming in, and even more so through the pandemic hangover.
"Despite the pandemic, revenues for the first quarter appear to be ahead of the management's prudent expectations and there are indications that this will continue into the early spring, but as the past 23 months have repeatedly demonstrated nothing can be taken for granted with the global pandemic."
At 1243 GMT, shares in Safestay were down 2.57% at 17.05p.
Safestay (SSTY)