Bid launched to take over Millennium & Copthorne Hotels
 
Bid launched to take over Millennium & Copthorne Hotels
07 JUNE 2019 12:40 PM

The boards of City Developments Limited and Agapier Investments Limited, an indirect wholly owned subsidiary of CDL, have reached an agreement on a pre-conditional offer to acquire Millennium & Copthorne Hotels. Currently, CDL owns approximately 65.2% of M&C.

  • Move is in line with CDL’s strong focus on boosting recurring income and enhancing underperforming assets
  • A privatised M&C will be in the best position to navigate the increasingly challenging and competitive global hospitality landscape with agility and nimbleness
  • Pre-conditional final cash offer for the remaining 34.8% of M&C not already held by CDL, at 685 pence for each M&C share, which is final and will not be increased
  • Secured irrevocable undertakings for approximately 43.6% of the M&C shares not already owned by CDL
  • Final Offer Consideration represents an increase of 65 pence from the previous cash offer of 620 pence per M&C share (which included a special dividend of 20 pence per share), and a premium of approximately 37.0% to M&C’s closing price[1]
  • Final Offer values the entire issued and to be issued ordinary share capital of M&C at £2.23 billion (approximately S$3.86 billion[2])
  • The maximum cash consideration payable by CDL amounts to £776.29 million (approximately S$1.34 billion2)

The boards of City Developments Limited (CDL) and Agapier Investments Limited (Bidco), an indirect wholly owned subsidiary of CDL, and the independent directors of Millennium & Copthorne Hotels Plc (M&C) have reached an agreement on the terms of a recommended pre-conditional final cash offer where Bidco will acquire the entire issued and to be issued ordinary share capital of M&C not already held by CDL. Currently, CDL owns approximately 65.2% of M&C. This offer is final and will not be increased.

M&C shareholders will be entitled to receive a cash amount of 685 pence for each M&C share. This represents a premium of approximately 37.0% to M&C’s closing price1. It is also an increase of 65 pence from the previously recommended final cash offer of 620 pence per M&C share (which included a special dividend of 20 pence per share) made to M&C shareholders on 21 December 2017. The previous offer lapsed on 26 January 2018 because CDL did not satisfy the minimum acceptance condition of more than 50% of M&C’s shares that it did not already own.

Irrevocable Undertakings from Key Minority Shareholders and Support of Independent Directors

This time, CDL has received irrevocable undertakings to accept the Final Offer from JNE Partners LLP, MSD Capital, L.P., International Value Advisers, LLC, Classic Fund Management AG and BWM AG. These key minority shareholders hold a total of 49,268,604 M&C shares representing approximately 43.6% of the M&C shares not already owned by CDL. Further, M&C’s independent directors, who have been advised by Credit Suisse, consider that the terms of the Final Offer are fair and reasonable, and intend unanimously to recommend that M&C shareholders accept the Final Offer.

The Final Offer values the entire issued and to be issued ordinary share capital of M&C at £2.23 billion (approximately S$3.86 billion2). The maximum cash consideration payable by CDL amounts to £776.29 million (approximately S$1.34 billion2) which will be funded through a combination of internal cash resources as well as funds made available to CDL under a credit facility.

Benefits of the Privatisation

CDL has been a highly supportive shareholder since M&C’s initial public offering on the London Stock Exchange in 1996. M&C faces a number of challenges and a highly competitive landscape. It would require significant and targeted capital investment to reposition assets as part of its long-term strategy.

Mr Sherman Kwek, CDL’s Group Chief Executive Officer, said, “Taking M&C private is in line with CDL’s strong focus on boosting recurring income and enhancing underperforming assets. We are pleased to have garnered the support of M&C’s independent directors and key minority shareholders. 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.”

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