The company said in a statement the bid approach was at a “very early stage and highly conditional”.
Nevertheless, it has decided to undertake a strategic review of its options in order to position its business for further growth and maximise value for existing shareholders.
“These options include, but are not limited to, a sale of the company which will be conducted under the framework of a ‘formal sale process’ in accordance with the Takeover Code,” it said.
Safestay (AIM:SSTY) said it protected its business during the Coronavirus (COVID-19) pandemic by reducing costs, taking advantage of government support and renegotiating rental terms with its landlords. It also raised GBP16.8mln from the sale of two assets, cut borrowing by 35% and spent GBP6.3mln on support for the reopening of the business.
The company added it has sufficient capital to compete “strongly” when the market recovers.
Chairman Larry Lipman said since reopening, the company’s hostels have seen occupancy improve month-on-month in line with internal forecasts.
“Individual and group bookings are coming in for the winter and for 2022 and underpin our confidence of returning to pre-COVID levels of trading. We believe strongly in the appeal of the Safestay brand,” the chairman said.
“However, we recognise that this is a natural point, as we relaunch the business post COVID, to undertake a strategic review, in order to maximise value for all shareholders. This process will reveal whether there is additional value for shareholders compared to the upside we believe we can deliver.”
Shares were up 16% at 23p.