CDL Hotels Holdings New Zealand Limited (CDLHH NZ), a subsidiary of City Developments Limited (CDL), has announced an offer to acquire all outstanding shares of New Zealand-listed Millennium & Copthorne Hotels New Zealand Limited (MCK) at NZ$2.25 ($1.72) per share. This move is part of CDL’s plan to simplify the ownership structure of its New Zealand entities, according to a filing on Jan 20.
MCK, which currently owns, leases, or franchises 18 hotels in New Zealand, also has a majority stake in CDL Investments New Zealand Limited and interests in properties in Australia through its Kingsgate Group subsidiaries.
As of Jan 17, CDLHH NZ already holds a 75.86% stake in MCK, representing 80.02 million shares out of 105.48 million in total. In the event that CDLHH NZ reaches the threshold to trigger the compulsory acquisition provisions of the New Zealand takeovers code, it will acquire all outstanding shares in MCK. CDLHH NZ also has the option to redeem MCK’s non-voting redeemable preference shares.
However, as the offer does not include MCK’s non-voting redeemable preference shares, CDLHH NZ has announced its willingness to acquire these shares at a price of NZ$1.70 or approximately $1.30 each. This acquisition will be made through Craigs Investment Partners, CDL’s broker 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 accepted by all shareholders, CDLHH NZ will pay a total of NZ$57.29 million for their shares. The company also expects to pay NZ$7.77 million for the redeemable preference shares.
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The offer price takes into account MCK’s market price and its operating environment. As of the first half of the fiscal year ending 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 amount. For the MCK shares subject to the offer, the NAV and NTA are approximately NZ$85.62 million each as of June 30, 2024.
The offer is subject to CDLHH NZ obtaining at least 90% of voting rights in MCK by 5pm on May 2. In addition, CDLHH NZ must receive consent under the Overseas Investment Act 2005 and the Overseas Investment Regulations 2005 of New Zealand to own and control all MCK shares.
The implementation and payment of this offer is not expected to have a major impact on CDL’s earnings per share (EPS) or net tangible assets (NTA) for the fiscal year ending Dec 31, 2025.