The Carlyle Group, the private equity group, is in exclusive talks to acquire Occidental Hoteles, an up-market Spanish hotel chain, in a deal worth up to €700m ($856m). It will be its second investment in Spain.

Carlyle, advised by Merrill Lynch, is understood to have entered a three-month period of exclusivity to buy the 80-strong chain, which operates hotels in Spain, Mexico, the Caribbean and Europe.