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City Developments Limited (CDL) Chairman Kwek Leng Beng insists that the final offer of 620 pence per share in cash for the remaining stake it does not already own in the London-listed Millennium & Copthorne Hotels (M&C) is more than sufficient, reported Reuters.
“This final offer represents a premium of 36.3 percent to the closing price of M&C shares of 455 pence on 6 October 2017 (the day before the Offer period), which is a very substantial premium given CDL already owns 65.2 percent of M&C,” said the billionaire in a letter.
“It is also higher than the price at which M&C shares have closed on any day in the 10 years prior to the possible offer announcement on 9 October 2017,” he said, adding that the offer will not be increased further, and it is highly unlikely to be repeated again in the near future.
M&C’s independent directors, who have been advised by Credit Suisse on this matter, also consider the final offer as fair and reasonable.
Kwek released this statement after it was reported last week that three minority investors in M&C consider the final offer as undervalued.
Hence, MSD Partners, Classic Fund Management International Value Advisers are persuading other minority investors not to accept CDL’s offer. Collectively, these three control about 37 percent of the 34.8 percent stake in M&C which CDL is intending to purchase.
Earlier this month, CDL increased its offer for M&C from 552.5 pence per share to 620 pence apiece, which respectively translates to a £1.8 billion (S$3.27 billion) and £2.01 billion (S$3.64 billion) valuation for the hotelier. The former also comes with a lower special dividend of 7.5 pence compared to 20 pence for the final offer.
In addition, the property developer pledged that it will not sell or repurpose any of M&C’s hotels in London or New York for at least three years. But it now needs the consent of at least 50 percent of M&C’s independent shareholders for the transaction to push through.
“The CDL board sincerely hopes that the actions of a few shareholders who have entered since the financial crisis will not preclude a number of long-term shareholders from being able to take advantage of this offer to exit from their holding in an illiquid stock at a real and significant premium,” added Kwek.
Notably, M&C owns, operates, franchises and invests in 137 hotels across 27 countries around the globe.
This article was edited by Keshia Faculin.
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