City Developments Limited (CDL), a development firm controlled by Singaporean billionaire Kwek Leng Beng, is close to an agreement to acquire the 35% of shares it does not already own in London-listed Millennium & Copthorne Hotels, after offering £776.29 mln (€872 mln) for the remaining stake.
'Taking M&C private is in line with CDL’s strong focus on boosting recurring income and enhancing underperforming assets,' said Sherman Kwek, CDL’s group CEO.
CDL said that it had agreed a price of 685 pence per share with the directors of the hotel group, a premium of around 37% to M&C's closing share price on June 6. The offer represents an increase of 65 pence from the the previous, failed bid of 620 pence per share made to M&C shareholders on December 21 2017.
The previous offer lapsed on January 26 2018 because CDL did not satisfy the minimum acceptance conditions for more than 50% of the unowned stock, the firm revealed.
CDL became a shareholder of M&C at its initial public offering on the London Stock Exchange in 1996. The development firm said that M&C currently faced 'a number of challenges and a highly competitive landscape'. CDL added: 'It would require significant and targeted capital investment to reposition assets as part of its long-term strategy'.
'We are pleased to have garnered the support of M&C’s independent directors and key minority shareholders,' Kwek added. 'The offer enables shareholders to exit an illiquid stock at a significant premium. We believe that a privatised M&C will be in the best position to navigate the increasingly challenging and competitive global hospitality landscape with agility and nimbleness.
'M&C will be able to leverage CDL’s significant resources, comprehensive real estate capabilities and global network to reposition its assets and drive sustainable hotel performance,' Kwek said.
The bid values the entire company at £2.23 bn. M&C's directors said they would recommend unanimously that shareholders accepted the offer, with key minority shareholders having already signed irrevocable undertakings.
CDl said the deal would be funded through a combination of internal cash resources as well as funds made available to CDL under a credit facility.
Linklaters acted as legal advisor to CDL. Herbert Smith Freehills is advising M&C on legal matters.
