A Winchester-based hotel firm, set up with a budget of £1.25m, has sold for over 50 times that amount.

Hotel du Vin's outgoing chief executive, Robin Hutson, broke the news at the company's 10th anniversary party on Sunday. He created the brand in 1994 with Gerard Basset when they converted the city's old Southgate Hotel, in Southgate Street, into their first venue.

The company has since opened hotels in Tunbridge Wells, Bristol, Birmingham, Brighton and Harrogate. Another is due to open in Henley-on-Thames next year.

Many of the venues are housed in quirky buildings. The Hotel du Vin in Bristol is a former sugar importing house, while the one in Birmingham used to be an eye hospital.

The building which houses the Winchester hotel dates back to 1715 and, with 23 bedrooms, is the chain's smallest venue.

Shareholders have now accepted a £66.4m offer for the business from the Malmaison hotel chain, owned by the Marylebone Warwick Balfour group. Mr Hutson said Malmaison planned to keep on all of Hotel du Vin's 500 staff, along with the brand name. Both chains will be managed by Malmaison's current chief executive, Robert Cook.

Mr Hutson will stay with the company until the hotel in Henley opens in the spring. He added that leaving the Hotel du Vin would not be easy for himself or his French partner, M.Basset. "It's been very close to our hearts and it's rather like parting with a child."

Mr Hutson said Malmaisonthe name of Napoleon Bonaparte's wife Josephine's chteau just outside Pariswas a logical buyer, as they operated similar venues to their own, chiefly in larger northern cities.

He said Hotel du Vin's success came from finding a gap in the market. "We had a niche market effectively, and stuck to our guns by trying to provide very good quality for sensible prices, and it has been very well received."

Mr Hutson (47) is planning a long break when he leaves the firm to ponder what line of business to tackle next. The largest single shareholder in Hotel du Vin is Winchester-based entrepreneur, Ashley Levett.

The former backer of Winchester and Richmond rugby clubs, and co-owner of Winchester Commodities, is likely to receive over £10m.

Other major shareholders include Gordon and Dame Anita Roddick, founders of the Body Shop.