Hotel company Keystone Lodging Co. Ltd. will acquire China-based 7 Days Group Holdings Ltd. (NYSE: SVN) in a deal valued at $688 million.

After the deal, Keystone will be owned by new investors, including affiliates of Carlyle Asia Partners II LP, Sequoia Capital China Growth 2010 Fund LP and an affiliate of Actis LLP, as well as other shareholders.

Guangzhou, China-based 7 Days Group converts and operates limited service economy hotels across major metropolitan areas in China.

The consortium will fund the deal with cash contributions from Carlyle, Sequoia, Actis and Boquan He, an existing shareholder, and a $120 million loan facility. The loan was arranged by Cathay United Bank, Chinatrust Commercial Bank Co. Ltd., Nomura International Ltd., Ta Chong Bank Ltd. and Taipei Fubon Commercial Bank Co. Ltd.

The deal is expected to close in the second half of 2013.

J.P. Morgan Securities (Asia Pacific) Ltd. is 7 Days’ special committee’s financial adviser, while Baker & McKenzie is serving as U.S. legal counsel, Maples and Calder is serving as Cayman Islands legal counsel and O’Melveny and Myers LLP is U.S. legal counsel. Shearman & Sterling is J.P. Morgan Securities’ legal counsel.

Nomura is the consortium’s financial adviser. Skadden Arps Slate Meagher & Flom LLP is counsel to the consortium of Keystone’s new investors. Conyers Dill & Pearman and Han Yi Law Offices are serving as Cayman Islands and China legal counsel to the consortium, respectively. Latham & Watkins LLP is shareholder He’s legal counsel.

Linklaters is serving as legal counsel to the financing banks.

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