MFS May Sell 50% Stake in Stella Unit to Buyout Firms

By Robert Fenner
MFS Ltd., an Australian fund manager and resort operator, may sell a 50 percent stake in its Stella hotels and travel unit to buyout firms.

If no agreement can be reached with private equity then the company won't proceed with an initial public offering of Stella ``in the foreseeable future,'' Southport, Queensland-based MFS said in a statement today.

Stella owns and franchises Australian hotel brands such as Peppers and Saville as well as travel agencies including Harvey World and HRG. With a 74 percent stake in Africa's Protea Hotels, which runs 126 hotels in 13 countries, and 40 percent of the Golden Tulip chain, the company manages about 49,000 rooms.

MFS in March appointed UBS AG and Grant Samuel to advise on ownership and financing options for Stella, the largest integrated travel and accommodation group in Australia and New Zealand. The 50 percent stake may be worth at least A$1 billion ($890 million), the Australian Financial Review reported June 14.

Stella had A$45 million in earnings before interest, tax, depreciation and amortization in the first-quarter ended Sept. 30, beating the company's target.

Earnings in fiscal 2009 are forecast to rise 25 percent with a 13 percent increase expected in 2010, MFS said.

MFS said it has a ``number'' of potential acquisitions it may make without providing details.