NH shareholder Hesperia seen likely to tender stake to Mint's offer
28 SEP 2018
NH Hotel Group’s [BME:NHH] 8.1% shareholder Hesperia is likely to tender its stake into Minor International’s (Mint) [BKK:MINT] takeover offer, said a sector dealmaker and two people familiar with the situation.
Earlier this week, Hesperia bought 17,000 shares in NH at EUR 6.31, just above Mint’s adjusted offer price of EUR 6.30, as reported. Hesperia, whose flagship hotel is in L'Hospitalet de Llobregat in the outskirts of Barcelona, has also hired JP Morgan to help find a white knight, as reported.
However, the stake buy should be read as a desperate attempt to get Mint to pay more, said the dealmaker. Hesperia has very high debt levels and needs to get as much money as possible for its shares, this dealmaker said.
Hesperia has disclosed that most of its 31.89m NH shares are security on a loan worth EUR 97m with Societe Generale. At the offer price, its shares would be worth just over EUR 200.9m.
Although all options are on the table, a counter-bid for NH by Hesperia is the least likely and hardest to execute, said one of the people familiar with the situation. Mint has increased its stake while waiting for Spain’s National Securities Market Commission (CNMV) to approve its offer document and currently holds just over 46% of NH.
As matters stand, Mint looks unlikely to increase its price, the first person said. The most likely options for Hesperia are tendering into the offer or remaining as a shareholder, this person said.
Mint's offer does not have an acceptances condition. But, if Mint announces that it has reached 51% ownership in NH, Hesperia is thought likely to tender into the offer, a second person familiar said.
Mint has said that it wants to keep its ownership in NH in a range of 51% to 55%, as reported. If Hesperia decides to tender, it will exceed this range, the second person said. Options for Mint in this scenario would be to sell down excess shares on the market or to issue perpetual bonds, which count as equity instead of debt.
Hesperia launched its own takeover of NH in 2003 but failed to buy the Madrid-based chain. It then bought shares in the market, becoming NH’s main shareholder in 2006. The two companies reached an agreement in 2009, under which Hesperia’s hotels would use the NH brand. The unlisted company would continue to own the property, which would be managed by NH.
Hesperia has said it will cancel the agreement if Mint’s takeover is successful, said the second person, adding that it currently includes 24 hotels. The loss of the management fees to NH was already priced into Mint’s takeover offer, this person said.
Mint has already discussed agreeing a management deal with NH for its own hotels in Portugal and Brazil, said the second and a third person familiar with the situation.
Hesperia was founded by Jose Antonio Castro, a Spanish businessman who was born in Venezuela. He has his roots in construction and has an old-school approach, said the dealmaker. A sector adviser described Hesperia as very opaque, with an unusual structure and practices.
Spokespeople for Hesperia, Mint and NH declined to comment.