A&O buys Edinburgh hostel

A&O Berlin room

A&O Hotels and Hostels is expanding into the UK market with the purchase of an Edinburgh property from rival Safestay.

The Berlin-headquartered company has almost 40 properties spread out mainly across central Europe and this latest move represents a significant geographical expansion.

The deal is worth £16 million, representing a 22% premium to the £13.4 million book value.

Safestay, which made the disclosure in a stock market announcement, said it had managed to reduce costs across the business but that the growing length of lockdowns had meant that it needed “additional short-term capital.”

Part of the proceeds of the disposal will be used to reduce debt by 35% while providing the companywith sufficient cash reserves for the next months.

The deal is conditional on approval from Safestay’s shareholders.

A&O is owned by private equity firm TPG.