Singapore-based real estate giant City Developments Limited (CDL) has announced its plan to acquire the remaining shares of New Zealand-listed Millennium & Copthorne Hotels New Zealand Limited (MCK) through its subsidiary CDL Hotels Holdings New Zealand Limited (CDLHH NZ). The offer is set at NZ$2.25 ($1.72) per share, and upon completion, CDL plans to delist and privatise MCK, streamlining the ownership structure of its New Zealand entities.
MCK currently owns, leases, or has under franchise 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 subsidiaries from Kingsgate Group. CDL divested assets worth more than $600 million by 2024.
At the close of trading on January 17, CDLHH NZ holds 80.02 million shares in MCK, representing a 75.86% stake based on 105.48 million shares in issue. If CDLHH NZ reaches the threshold to invoke the compulsory acquisition provisions of the New Zealand takeovers code, it will compulsorily acquire all outstanding shares in MCK. CDLHH NZ may also choose to redeem the non-voting redeemable preference shares issued by MCK.
CDLHH NZ is willing to acquire the non-voting redeemable preference shares at NZ$1.70 or around $1.30 apiece. The purchase will be made through its broker, Craigs Investment Partners, 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. The company also expects to pay around NZ$7.77 million for all the redeemable preference shares it seeks to acquire. The offer price for MCK’s shares and redeemable preference shares takes into account the current and historical market price, as well as the industry and business environment in which MCK operates.
Based on its 1HFY2024 results as of June 30, 2024, MCK has a net asset value (NAV) and a net tangible asset value (NTA) of NZ$532.02 million each. The NAV and NTA attributable to the MCK shares subject to the offer are approximately NZ$85.62 million each as of June 30, 2024.
The offer is conditional upon CDLHH NZ receiving 90% or more of the voting rights in MCK by 5 pm on May 2. It also depends on CDLHH NZ obtaining consent under the Overseas Investment Act 2005 of New Zealand and the Overseas Investment Regulations 2005 of New Zealand to own and control all shares in MCK.
The implementation and payment of the offer are not expected to have a significant impact on CDL’s earnings per share (EPS) or net tangible assets (NTA) for the FY2025 ending December 31.