Millennium & Copthorne shareholders with combined 12.7% stake reject GBP 2bn improved takeover bid from City Developments Limited
15 DEC 2017
Millennium & Copthorne Hotels (M&C) [LON:MLC] shareholders International Value Advisers (IVA), MSD Partners and Classic Fund Management have rejected an improved GBP 2bn (EUR 2.28bn) takeover bid from M&C’s chairman Kwek Leng Beng, The Times reported. The newspaper cited an open letter from IVA, MSD and Classic to M&C’s independent directors on Thursday, 14 December for the information.
Kwek holds a 65.2% stake in M&C via his Singapore-based vehicle City Developments Limited (CDL) [SGX:C09]. M&C announced on 8 December that that its board and CDL had reached agreement on a recommended takeover offer for the M&C shares that CDL does not already own. CDL had increased the offer from 552.5p to 620p per share after M&C shareholders Aberdeen Standard Investments, Fidelity International, IVA and MSD had rejected its earlier offer.
IVA, MSD and Classic said in the joint letter that they would not accept the improved bid, despite Kwek saying he would make no further improvements to the offer and despite the recommendation of M&C’s independent directors, the report continued.
CDL needs acceptances from shareholders speaking for 50% of the M&C shares that CDL does not own, meaning that 17.4% of votes are required to prevent the deal going ahead, the newspaper said.
IVA, MSD and Classic hold a combined stake of 12.7% in M&C, or 37% of M&C shares that CDL does not own, the article said. However, one of the minority shareholders said tracker funds, which do not vote, hold a combined stake of up to 5% in M&C. Therefore, the threshold (required to block the deal) will be lowered, the item said.
One of the minority shareholders cited by the report said they were confident that the takeover will not proceed.
Fidelity and Aberdeen Standard have not yet commented on CDL’s improved offer, the newspaper said. CDL has yet to submit a formal bid and the outcome of the takeover battle may not be revealed until January, according to the report.
IVA, MSD and Classic said in the letter that CDL’s offer is still “highly opportunistic” and that it “fundamentally undervalues” the target company. The shareholders said the 620p per share bid is 25% lower than its 822p book value, the item added. The letter said the book value is outdated and is significantly lower than the M&C assets’ market value.
CDL claims that asset values are irrelevant as it does not plan to redevelop or sell any of its most important assets, the item said.
Millennnium & Copthorne’s share price closed 7.5p down at 579.5p in London on Thursday, giving the company a market capitalisation of GBP 1.88bn.