Millennium & Copthorne Hotels (MLC) has received a takeover approach from Singaporean real estate investment company City Developments (CDL) in a £2.2bn deal, with the prospective buyer having received “irrevocable undertakings” from key shareholders to accept the bid.
City is part of the Hong Leong Group, which is also owned by M&C’s chairman, Singaporean billionaire Kwek Leng Beng. It owns around two-thirds of the hotel group and has long had an interest in taking M&C privately. It submitted a £1.8bn offer in October 2017, before raising this to £2bn in December 2017.
Shareholders will receive 685p in cash per share, a premium of around 37 per cent to the closing price of 500p on 6 June, the day before the offer period commenced. The buyer has received guarantees of acceptance from NE Partners, MSD Capital, International Value Advisers, Classic Fund Management and BWM AG, which own 49,268,604 M&C shares in aggregate, equivalent to around 43.58 per cent of the company.
Millennium has had a challenging time of late. It cut its full-year dividend by more than a third at its results in February, in anticipation of a difficult year dictated by the US-China trade war, Brexit and rising global wages.
Sherman Kwek, group chief executive of CDL, said, “Taking M&C private is in line with CDL's strong focus on boosting recurring income and enhancing underperforming assets... 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.”
In February, Berenberg analysts forecast 2019 operating profits of £152m.
