Singapore's City Developments mulls buyout of United Kingdom hotel arm

Singapore's City Developments mulls buyout of United Kingdom hotel arm”

CDL said in a statement on Monday it has reached an agreement with the independent directors of M&C whereby the Singapore developer will make a possible offer of 552.5 pence a share for M&C, valuing the United Kingdom hotelier at 1.794 billion pounds.

The proposed offer price is about 24% higher than M&C's closing price of 446.7 pence on August 18, which was the day before CDL made its proposal, and 21% above M&C's closing price on October 6.

Millennium & Copthorne's founder and chairman Kwek Leng Beng also serves as the executive chairman of its majority shareholder.

M&C independent directors consider the financial terms to be fair and reasonable, they said in the joint statement issued on Monday.

The hotels firm now owns seven sites in the capital, according to its website, including the Chelsea Harbour Hotel and the eponymous Millennium hotels in Mayfair and Knightsbridge.

If it takes control of the company, the current business model of M&C will be maintained and run as an operator of its hotel portfolio, CDL said. Chinese buyers have been the most active purchasers in the sector with C C Land, LKK Health and R&F Properties picking up trophy assets.

CDL is part of Singapore-headquartered Hong Leong Group, headed by Mr Kwek, and indirectly held shares representing a 65.2 per cent stake in M&C as of Monday (Oct 9).

City Developments - which shares a board link with its takeover target - said it would maintain the company's current business model and assured it had no intention to sell or re-purpose any of its hotels in NY and London. In the first half of this year, the hotel group accounted for 49 percent of CDL's revenue.

Deutsche Bank and HSBC Bank acted as financial advisers to CDL, while Credit Suisse acted on behalf of M&C's independent directors.

Of the offer price, 545 pence is payable in cash by City Developments' subsidiary Agapier Investments Ltd. and the rest will come via a special dividend which will be paid once the offer goes unconditional.

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