Budget hotel network OYO, which earlier finalized a $250 million deal with SoftBank, has recently acquired Chennai-based service apartment operator Novascotia Boutique Homes. The company by buying Novascotia Boutique Homes is marking its first major buyout as well as is establishing its presence in the service apartment and corporate executive stay segment. The negotiations for the deal which were kicked off in October last year, concluded last month. The SoftBank backed hotel aggregator is believed to have offered 6.71 crore to acquire Novascotia.
OYO’s Earlier Acquisitions
This is the first all-cash deal struck by OYO for a brick-and-mortar venture. The company had earlier negotiated to acquire smaller rival Zo Rooms, but later terminated the negotiations stating that it had failed to identify any “potential value” in the latter’s business.
Till date, OYO has made about six acqui-hires since 2016, but has not publicly announced about any deals. Most of the transactions were done to acquire the teams of the acquired ventures, and were stock deals with a small cash component.
Novascotia Boutique Homes manage a total of 350 rooms in five cities including Chennai, Coimbatore, Hyderabad, Kochi and Trivandrum. The company was founded by G Madhu Manohar and Girja Madhu; it has about 64 employees, who will be now absorbed by OYO in different roles. It counts companies such as EY and Cognizant Technologies amongst its corporate clientele.
Using Funds to Finance its Acquisitions
OYO, in the southern part of India manages about 16,000 rooms in 900 exclusive hotels, which are spread across Karnataka, Andhra Pradesh, Tamil Nadu, Telangana and Kerala.
Earlier this month, Ritesh Agarwal, OYO chief executive had said that the company is planning to use a significant portion of the $250 million it has raised from a clutch of global investors, at a valuation of about $850-900 million, to finance the acquisitions.