NH Hotel main shareholders reject all aspects of Barcelo's offer - reported rumour (translated)
19 DEC 2017
NH Hotel Group [BME: NHH], advised by Bank of America Merrill Lynch, believes that none of the preliminary aspects of the proposed offer by hotel peer Barcelo are minimally satisfactory to advance negotiations, El Confidencial reported. The report cited sources from NH shareholders.
The board of directors of NH Hoteles has its last meeting of the year tomorrow (20 December) to analyse the unsolicited offer from Barcelo, the Spanish-language report noted.
NH Hoteles main shareholders -- the Chinese HNA (29%), Hesperia (9%), and Oceanwood (12%) -- have agreed on the basic points to be reviewed, as revealed on 14 November, if they were to consider pursuing negotiations, El Confidencial said citing sources close to the shareholders. Although their objections differ, they agree on the matters of price and the model proposed: that Barcelo is not offering cash but paper, seeks a majority stake without paying a premium for control and wants to solve illiquidity problems among its shareholders by accessing the stock exchange.
The transaction would allow Barceló to become a listed company and give liquidity to some of its shareholders who disagree with the current management. The Barceló family, divided into two branches, would obtain the majority of the board without having to launch a takeover bid for it.
NH also believes that becoming a national champion would not add any operational value to the resulting company, given that a higher volume of rooms is no guarantee of higher profitability, the report said.
Moreover, while the sum total of the companies' urban and vacation businesses is complementary, not all of Barceló's international geographic areas fall into this category. Likewise, the underlying real estate assets of both companies have different valuations, with urban hotels leading Caribbean resorts.
Finally, NH Hoteles’ three-year plan aims to double its EBITDA by 2020 to EUR 300m. Barceló's offer does not contemplate this projection, so NH's shareholders are encouraged to renounce this growth plan.
Barceló has tabled an all-paper offer at EUR 7.08 per share, or a 27% premium on NH’s average stock value for the last three months.