Canadian private equity firm Clarke Inc. is acquiring all of the common shares of Holloway Lodging Corp. that it does not already own in a share exchange agreement.

The share exchange ratio translates to an acquisition price of C$8.46 per Holloway share and a premium of 14% based on the Aug. 8 closing prices of shares of the two companies.

The deal is expected to close by Sept. 30, subject to the approval of the shareholders of both companies, court approval and other customary closing conditions.

Clarke will grant 0.65 of a share for each share of Holloway, issuing a total of 4,940,193 of its shares in the process. It owns 51% of the Holloway shares.

The transaction, which has been approved unanimously by the boards of both companies, is valued at approximately C$132 million on an equity value basis and C$265 million on an enterprise value basis.

The agreement also entitles Clarke to receive a termination fee of C$1.5 million if Holloway accepts a superior proposal from a third party, among certain other circumstances.

In a separate release, Holloway said its directors agreed to cease the company's regular quarterly dividend in connection with the transaction. Holloway will become a wholly owned subsidiary of Clarke following the acquisition.