Hyatt Bids $397 Million for Rival Ramada Inc.

Hyatt Corp. offered Thursday to buy rival hotelier Ramada Inc. for an estimated $397 million.

Ramada officials were noncommittal after Hyatt announced its bid, but investors reacted enthusiastically to the offer, bidding Ramada stock up $2.125 a share to $9.75, up 28%, in New York Stock Exchange trading.

Hyatt chief Jay Pritzker made the offer in a letter to Ramada Chairman Richard Snell, Hyatt spokeswoman Karen Rugen said.

Deadline Set

“We have believed for some time that an affiliation of our companies would be mutually beneficial,” Pritzker’s letter said.

Spokesman Joe Cole said the Ramada board would meet to discuss the offer before the close of business next Friday, the deadline set by Pritzker in his letter.

Pritzker’s letter said the proposal would expire “if you have not indicated a sincere desire on or before” the deadline set.

“Should you choose not to commence a dialogue with us or should market conditions warrant, we may take unilateral action to increase our stake in the company or to dispose of any or all or any part thereof.”

Neither Cole nor Rugen could comment beyond company statements when asked whether the offer was considered hostile.

Hyatt offered to pay $10 for each of Ramada’s 39.7 million shares outstanding for a total of $397 million.

HCC Corp., a Hyatt affiliate, already holds 2.8 million shares, or 7.2%, of Ramada stock, Rugen said.

Cash on Hand

Cole said it has been known for some time that the Pritzker family, which founded the closely held Hyatt, has been interested in Ramada.

“The last conversation before this offer (was in) March of this year,” he said. At that time, Ramada officials told Hyatt officials that they were not interested, Cole said.

Pritzker’s letter said Hyatt had cash on hand for the transaction.

“Our proposal to acquire all of the equity of the company is not conditioned upon financing and we have available sufficient funds to consummate the transactions contemplated hereby,” Pritzker wrote.

Ramada companies operate 800 hotels, mostly moderately priced, in 40 countries. They include Ramada Inns, Rodeway motels and the upscale Ramada Renaissance hotels. Ramada also owns 135 restaurants in the Marie Callender’s chain, Cole said.