CDL’s subsidiary, CDL Hotels Holdings New Zealand Limited (CDLHH NZ), has announced its intention to acquire all the shares it does not currently own in the New Zealand-listed Millennium & Copthorne Hotels New Zealand Limited (MCK) for NZ$2.25 ($1.72) per share. The company plans to delist and privatise MCK after the completion of the offer, simplifying the ownership structure of its New Zealand entities.
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MCK currently owns, leases or has under franchise 18 hotels in New Zealand and has a majority stake in CDL Investments New Zealand Limited. It also has interests in properties in Australia through its Kingsgate Group subsidiaries.
As of Jan 17, CDLHH NZ holds 80.02 million shares in MCK, or a 75.86% stake. If it reaches the mandatory acquisition threshold under the New Zealand takeover code, CDLHH NZ will acquire all outstanding shares in MCK. It may also redeem the non-voting redeemable preference shares issued by MCK.
CDLHH NZ is willing to purchase the non-voting redeemable preference shares at NZ$1.70 ($1.30) each through its broker, Craigs Investment Partners, on the Main Board of the New Zealand Stock Exchange (NZX). As of Jan 17, CDLHH NZ holds 91.34% – or 48.17 million – of MCK’s non-voting redeemable preference shares.
If the offer is fully accepted, CDLHH NZ will pay a total of NZ$57.29 million. It is also expecting to pay approximately NZ$7.77 million for all redeemable preference shares to be acquired.
The offer price takes into account the historical and current market prices of MCK’s shares, as well as the business environment in which it operates. As at June 30, 2024, MCK had a net asset value (NAV) of NZ$532.02 million and a net tangible asset value (NTA) of the same amount. The NAV and NTA attributable to the MCK shares subject to the offer are approximately NZ$85.62 million each.
The offer is conditional upon CDLHH NZ acquiring 90% or more of the voting rights in MCK by 5pm on May 2. It also requires the company to obtain consent under the Overseas Investment Act 2005 and the Overseas Investment Regulations 2005 of New Zealand to own and control all the shares in MCK.
The implementation and payment of the offer is not expected to have a significant impact on CDL’s earnings per share (EPS) or net tangible assets (NTA) for the financial year ending Dec 31.