Singapore-based City Developments Limited (CDL) has announced an offer to acquire all outstanding shares in New Zealand-listed Millennium & Copthorne Hotels New Zealand Limited (MCK) through its subsidiary CDL Hotels Holdings New Zealand Limited (CDLHH NZ). The offer price is set at NZ$2.25 ($1.72) per share.
In a filing on January 20, CDL stated that after the offer is completed, it intends to delist and privatize MCK in order to simplify the ownership structure of its New Zealand entities. Currently, MCK holds, leases, or franchises 18 hotels in New Zealand and has a majority stake in CDL Investments New Zealand Limited. It also has interests in Australian properties through its Kingsgate Group subsidiaries.
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As of January 17, CDLHH NZ holds 80.02 million shares in MCK, representing a 75.86% stake based on 105.48 million MCK shares in issue. If CDLHH NZ reaches the threshold to trigger compulsory acquisition under the New Zealand takeovers code, it will buy out all remaining shares in MCK. Additionally, CDLHH NZ may choose to redeem the non-voting redeemable preference shares issued by MCK.
While the MCK non-voting redeemable preference shares are not included in the offer, CDLHH NZ has offered to purchase them at a price of NZ$1.70 ($1.30) per share. This purchase will be made through Craigs Investment Partners, the group’s broker, on the Main Board of the New Zealand Stock Exchange (NZX). As of January 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 consideration of NZ$57.29 million. It is also expected to pay approximately NZ$7.77 million for all redeemable preference shares. The offer price takes into account the prevailing and historical market prices, as well as the current industry and business environment in which MCK operates.
As of June 30, 2024, MCK recorded a net asset value (NAV) of NZ$532.02 million and a net tangible asset value (NTA) of the same. For MCK shares subject to the offer, the NAV and NTA are approximately NZ$85.62 million each.
The offer is conditional upon CDLHH NZ receiving at least 90% of the voting rights in MCK by 5:00pm on May 2, as well as obtaining consent under the Overseas Investment Act 2005 and the Overseas Investment Regulations 2005 of New Zealand. The implementation and payment of the offer are not expected to have a significant impact on CDL’s earnings per share or net tangible assets for the fiscal year ending December 31, 2025.