CDL Hotels owns 75 percent of Millennium & Millennium Copthorne Hotels and is making a full takeover bid. Photo: RNZ / Dan Cook
- Singapore-owned CDL raises bid for remaining shares in Millennium & Copthorne Hotels
- Offer increased to $2.80 per share from $2.25
- MCK independent directors previously valued company at almost twice the offer price
- CDL says the new offer is its best offer
A multi-million dollar fight is brewing between the two biggest shareholders in hotel company Millennium & Copthorne Hotels (MCK).
CDL Hotels owns 75 percent of Millennium & Millennium Copthorne Hotels (MCK) and has raised its takeover offer to $2.80 a share from the $2.25 offered in February.
MCK recently traded at $2.16 a share, although its share price on the NZX today has risen by 27 percent to $2.75 a short time ago. It is the only hotel owner-operator listed on the NZX Main Board.
The improved offer drew a quick and unusually emphatic rejection by the Accident Compensation Corporation (ACC), which owned just over 4 percent of Millennium.
The original offer was rejected by MCK's independent directors as vastly undervaluing the company compared to a report saying it was worth between $4.40 and $5.00, while its assets were worth at least $3.36.
"A key motivation for the offer is to provide shareholders with liquidity that may not otherwise be available, offering an opportunity to sell shares (without brokerage costs) at a premium over the trading price prevailing at the time," CDL said in a letter to shareholders
CDL disputed the valuation, stating it was theoretical and not reflective of a practical outcome for MCK's minority shareholders.
In February, MCK's independent directors said the offer was well short of an independent valuation with a mid-point of $4.70, and they advised shareholders to ignore the offer.
But CDL disputed the valuation, stating it was theoretical and not reflective of a practical outcome for MCK's minority shareholders.
It also stated that it had sufficient control of MCK to do what it wanted with the company.
"Among other things, the ability to change MCK's constitution, appoint new board members, and influence or change MCK's strategy including decisions on operating expenditure, capital expenditure, capital structure and dividend policy, recognising the rights of minority
shareholders.
"Accordingly, $2.80 is the final and best price that CDL is willing to pay."
ACC publicly voiced its rejection of the new offer.
"In our view, the offer is unreasonable and opportunistic."
ACC blamed the depressed share price on cyclically low earnings and said CDL was looking to pick up two hotels MCK had recently acquired for "cents in the dollar".
It also accused the Singapore company of being "egregious" in a move to redeeem another class of shares at a price well below the offer for the main shares.
"ACC is a long-term investor and will continue to work to maximise value for minority shareholders."
The offer is set to close on 8 May.
There was no immediate response from MCK's independent directors.
MCK currently has 18 owned, leased and franchised hotels across New Zealand under the Millennium, Grand Millennium, M Social, Copthorne and Kingsgate brands, and employs more than 500 people across its network.
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