ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Wednesday, January 24, 1996 TAG: 9601240003
SECTION: BUSINESS PAGE: B-7 EDITION: METRO
SOURCE: JEFF STURGEON STAFF WRITER
Doubletree Corp., which manages the Hotel Roanoke and Conference Center, said it intends to buy a private Memphis, Tenn., hotel management company that leases and runs 48 hotels.
Phoenix-based Doubletree has agreed to purchase RFS Inc. for 3 million shares of Doubletree stock, which would be newly issued for the purchase, said Bill Perocchi, Doubletree's chief financial officer. At Tuesday's closing price of $25.75 per share, the deal would be valued at $77.3 million.
RFS wants to affiliate with Doubletree, which it views as "top-notch" hotel managers, said Mimi Hall, an RFS spokeswoman.
Doubletree sees the deal as a means of growth. The purchase of RFS, expected to happen by April 1, would increase to 162 the number of hotels Doubletree manages. Being added are limited-service properties operated under Holiday Inn and Hampton Inn brands. None is a Doubletree hotel or would become Doubletrees as a result of the transaction.
Doubletree said the acquisition also would expand its earnings. RFS derives its revenue through management fees, and these fees would flow to Doubletree under the proposal.
Separately, Doubletree has agreed in principle to buy about $18.5 million worth of stock of RFS Hotel Investors Inc., also of Memphis, a publicly traded real estate investment trust that owns the hotels that RFS Inc. manages.
In return, Doubletree would receive, for 10 years, the first option to lease future hotels acquired by the trust.
If both deals are signed, Peter V. Ueberroth, co-chairman of Doubletree, will be nominated for RFS Hotel Investors' board of directors, while Robert M. Solmson, president of RFS Inc., will be nominated to sit on Doubletree's board.
Ueberroth, in a prepared statement, said: "This proposed strategic relationship with [RFS Hotel Investors] should enhance our ability to grow."
LENGTH: Short : 42 linesby CNB