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Microsoft In Advanced Talks To Invest In Hotel Company Oyo, Says Source; VICI Properties To Purchase MGM Resort-Controlled MGM Growth Properties

Published on Aug 6 2021 9:52 AM in Hotel tagged: Microsoft / OYO / MGM Resorts / Microsoft Corp / MGM Growth Properties / VICI Properties

Microsoft In Advanced Talks To Invest In Hotel Company Oyo, Says Source; VICI Properties To Purchase MGM Resort-Controlled MGM Growth Properties

Microsoft Corp is in advanced talks to invest in Indian hotel chain Oyo at a $9 billion valuation, a source familiar with the matter has said. The deal could be announced in the coming weeks and wo...

Microsoft Corp is in advanced talks to invest in Indian hotel chain Oyo at a $9 billion valuation, a source familiar with the matter has said.

The deal could be announced in the coming weeks and would be a prelude to an initial public offering (IPO) by Oyo, the source said.

Founder and CEO Ritesh Agarwal said last month that Oyo would consider a potential public offering, but did not provide a timeline.

The deal may involve Oyo shifting to use Microsoft's cloud services, TechCrunch reported earlier, citing people familiar with the matter.

Oyo is one of India's largest start-ups. Founded by Agarwal in 2013, it aggregates bookings for budget hotels around the world.

The hotel aggregator, in which SoftBank Group Corp owns 46% stake and is one of its biggest bets, has endured months of layoffs, cost cuts and losses since the COVID-19 pandemic began last year.

VICI Properties To Purchase MGM Resort-Controlled MGM Growth Properties

In other hotel industry news, MGM Growth Properties, which is majority controlled by MGM Resorts, has agreed to sell itself to VICI Properties Inc in a $17.2 billion deal that will see the casino operator cash in on its valuable real estate to fund growth.

The stock-for-stock deal, which includes $5.7 billion of debt, will get MGM Resorts $4.4 billion for its stake in MGM Growth and is a part of MGM's 'asset light' strategy to invest in areas such as sports betting and casino development in Japan.

Last month, MGM Resorts said that it would buy the remaining 50% stake in its joint venture CityCenter complex, so that it could sell two properties within the complex to private equity firm Blackstone for $3.89 billion.

"[We] remain focussed on pursuing growth opportunities in our core business, with significant financial flexibility to continue to deploy capital to maximise shareholder value," MGM Resorts CEO Bill Hornbuckle said.

MGM Growth owns a portfolio of properties that consists of 12 resorts in Las Vegas and elsewhere in the United States.

VICI's stock offer of $43 per share represents a premium of approximately 16% to MGM Growth's closing price on Tuesday August 3.

VICI's portfolio consists of 28 gaming facilities and about 17,800 hotel rooms and more than 200 restaurants, bars, nightclubs and sportsbooks.

MGM Resorts will own an approximately 1% stake in the VICI operating partnership, worth approximately $370 million.

The deal is expected to close in the first half of 2022, the companies said.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.

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