New CEOs at Carlson, NH alter HNA acquisition landscape
 
New CEOs at Carlson, NH alter HNA acquisition landscape
26 JANUARY 2017 9:48 AM

David Berg is out at Carlson Hotels with former NH Hotel Group CEO Federico González Tejera set to take over. These changes at the top might have profound implications on how Chinese capital continues to play out in Europe.

REPORT FROM EUROPE—Federico González Tejera is back at the top of a major hotel group, having been appointed CEO of Carlson Hotels.

The former CEO of NH Hotels is to begin his new role on 1 February, replacing David Berg at Carlson Hotels Group. There is no indication in the news release as to what’s next for Berg, who notably was absent from this year’s Americas Lodging Investment Summit in Los Angeles, where he was scheduled to speak in an opening session.

Berg had been Carlson’s CEO since May 2015, after working roughly a year and a half as COO.

At the same time, NH Hotels announced a new CEO on 25 January.

NH’s choice as its new CEO is Ramón Aragonés, formerly NH’s executive director of business and operations. Aragonés previously worked for Spanish real estate investment trust Hesperia.

The two appointments come amid a great deal of recent developments involving Chinese firm HNA’s 28.5% ownership of NH Hotels and its full buy of Carlson Hospitality Group on 7 December. In that purchase, HNA picked up Carlson’s 51.3% ownership stake in Rezidor Hotel Group, listed on the Stockholm Stock Exchange.

The entire scenario, sources said, provides some insight as to how Chinese capital will play out in Europe and beyond, and it looks to be far from straightforward.

HNA has been arguing with Hesperia, and others, about the direction of NH and publicly stated last September it wished to see González Tejera reinstated as CEO of NH, and other ousted board members restored to their positions.

Shareholders in NH were successful in ousting González Tejera last June after he had been on the job since early 2013 over those concerns about a conflict of interest and the damage they felt would be inflicted on the performance of their investments. (HNA also owns 25% of Hilton Worldwide Holdings.)

On 24 January, HNA replaced the Carlson representative on Rezidor’s board with its own representative.

Inma Ranera, managing director, Spain and Portugal, at business consultancy Christie & Co., said she believes the struggles between NH and Hesperia will continue. One issue, she said, is that some NH stockholders, including Hesperia, see conflicts of interest with HNA’s ownership, full or part, in both NH and Carlson Rezidor.

Stefan Andersson, an analyst at Swedish bank Nordea, told Hotel News Now HNA’s 28.5% stake in NH has not been increased at any time—a strategy he suggested might be replicated in its dealing with Rezidor.

Under Swedish law, by owning a majority in Rezidor, HNA had to either launch a mandatory tender offer for Rezidor’s remaining shares or explain how it would divest parts of Rezidor, so that its ownership in Rezidor would drop to below 30%.

HNA did so, announcing on 23 December a mandatory public offer to acquire the remaining shares for a cash consideration of 34.86 Swedish krona ($3.95) per share. 

Calls to HNA, NH Hotels and Carlson were not returned by press time.

Moving pieces
HNA has appeared reluctant to increase its stake in its part-owned European assets, according to sources.

Andersson said that while HNA was buying things “left, right and center,” it was dragging its heels in many regards.

“What we hoped for was a good bid from HNA for Rezidor, but what we got was just the mandatory bit, the minimum,” Andersson said.

Andersson said that HNA appeared to be playing a waiting game, to see what the appetite was for its full involvement.

“HNA would be stupid to buy Carlson Hotels and then destroy Rezidor. What they really want is Rezidor,” Andersson said. He added that one reason for delay, and the continued 30% stake in NH, was that the Chinese government might not be willing to let more Chinese capital leave China.

“Carlson Hotels looks to be big, but when you look at the numbers, you’re left with Country Inns assets in the middle of the U.S., which are franchised and return only 2%. Rezidor is leases, which returns 100%,” Andersson added.

Ranera said it is business as usual at NH, even though there is a clear struggle for power.

“From an operating viewpoint, NH is doing very well, regenerating its portfolio after a tough economic situation, and HNA involvement has allowed it fresh equity,” Ranera said.

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