CITY Developments Ltd’s (CDL) wholly owned subsidiary intends to purchase all the fully paid ordinary shares in hotel company Millennium & Copthorne Hotels New Zealand (MCK) that it does not already own, at NZ$2.25 a share.
The maximum aggregate cash consideration payable by CDL Hotels Holdings New Zealand (CDLHH NZ) is NZ$57.3 million (S$43.7 million).
On Monday (Jan 20), CDL said the offer is being made with a view to delist and privatise MCK, which will “simplify the ownership structure” of CDL’s investment entities in the country.
As at the last full trading day on Jan 17, CDLHH NZ holds some 80 million shares or about 75.9 per cent of all MCK shares.
If the purchase goes through 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”, said CDL.
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.
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MCK’s parent company is Millennium & Copthorne Hotels, which was acquired by CDL in 2019 in a deal that valued the previously London-listed hotel operator at about £2.2 billion (S$3.7 billion).
CDL also pointed out that the trading volume of MCK shares on the New Zealand bourse has “historically been low”, and it aims to “provide minority shareholders with a liquidity event at a significant premium”.
The purchase consideration of NZ$57.3 million is a premium of about 25.1 per cent over the market value of the MCK shares being acquired, which is about NZ$45.8 million.
The market value is derived from the volume-weighted average price of about NZ$1.80 per MCK share for all the trades done on the last trading day.
The consideration is, however, a discount of 33.1 per cent to the net asset value of the MCK shares being purchased. For the six-month period ended Jun 30, 2024, MCK posted a net asset value of about NZ$532 million.
Separately, CDLHH NZ also intends to acquire the non-voting redeemable preference shares issued by MCK at NZ$1.70 apiece.
This brings the aggregate cash consideration payable by CDLHH NZ for the redeemable preference shares to NZ$7.8 million.
CDLHH NZ holds about 91.3 per cent of all MCK redeemable preference shares as at the last trading day.
The market value of the redeemable preference shares is about NZ$7.8 million. The net asset value of the shares amount to NZ$15.4 million for the half-year period in fiscal year 2024.
CDL noted that both transactions are 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 ended Friday 1 per cent or S$0.05 higher at S$5.10.
