THE offer by City Development Limited’s (CDL) wholly owned subsidiary to take Millennium & Copthorne Hotels New Zealand (MCK) private at NZS$2.25 per share is “too low and inadequate”.
In a bourse filing on Monday (Feb 10), MCK said: “The independent directors believe that the offer does not sufficiently reflect the value of MCK’s hotel and property net assets, and the benefits that MCK can expect as the hotel and property markets recover.”
In January, CDL’s Kiwi unit announced its intention to purchase all the fully paid ordinary shares in hotel company MCK that it does not already own.
The maximum aggregate cash consideration payable by CDL Hotel Holdings New Zealand (CDLHH NZ) is NZ$57.3 million (S$43.7 million).
The offer was made with a view to delist and privatise MCK, which CDL said will “simplify the ownership structure” of its investment entities in the country.
CDL had also noted that if the deal is successful and MCK is delisted, the hotel company will be able to save on listing fees and other associated costs, which can be “reinvested into MCK’s portfolio of assets and operational needs”.
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CDLHH NZ currently holds 75.8 per cent of MCK shares.
Leslie Preston, chair of the independent directors committee, said: “We will provide shareholders with a target company statement within the next two weeks that will include more detail, but we are advising shareholders to take no action at this time.”
The privatisation offer is conditional on several factors, including approval under the overseas investment act, and must be held open until at least 5 pm on May 8, said MCK.
It also noted that the offer cannot be closed early or withdrawn, except with the consent of the takeovers panel, and the offer price cannot be reduced.
“There is no benefit or advantage to MCK shareholders in accepting CDLHH NZ’s offer early and once given, your acceptance cannot be withdrawn,” it added. “MCK shareholders who accept the offer will not be paid unless and until the offer becomes unconditional. This could be several months from now, if ever.”
Listed on the New Zealand Stock Exchange, MCK is a hotel group which owns, leases and/or has under franchise 18 hotels in New Zealand. It has a majority stake in land developer CDL Investments New Zealand.
MCK’s parent company is Millennium & Copthorne Hotels, which was acquired by CDL in 2019 in a deal that valued the hotel operator, previously listed in London, at about £2.2 billion (S$3.7 billion).
CDL noted previously that the transaction is not expected to materially affect the group’s net tangible assets or consolidated earnings per share for the fiscal year ending Dec 31, 2025.
Shares of CDL were trading 0.2 per cent or S$0.01 lower at S$5.03 as at 11.13 am on Tuesday.
