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Millennium & Copthorne independent directors recommend shareholders accept CDL offer

By PC Lee

/ The Edge Singapore |

October 23, 2017 2:33 PM SGT

SINGAPORE (Oct 20): The independent directors of Millennium & Copthorne Hotels have agreed to support City Development’s takeover offer of 552.5 pence in cash.

The recommendation comes after Credit Suisse, financial adviser to M&C's independent directors, found CDL’s offer price to be fair and reasonable, says the two parties in a joint announcement today.

“Accordingly, the M&C independent directors intend unanimously to recommend that M&C shareholders accept the proposed offer, subject to finalisation of the terms and conditions related to regulatory clearances,” says the filing.

Source: Millennium & Copthorne Hotels

CDL, which holds 65.2% of M&C’s shares, says its proposed offer will be conditional upon the bidding vehicle, a wholly owned subsidiary of CDL, obtaining acceptances exceeding 50% of M&C shares not already owned by the CDL group.

The offer is also conditional on approval from New Zealand authorities on matters related to the indirect acquisition of interests in sensitive land and significant business assets.

In the filing, M&C’s independent directors revealed they had rejected outright CDL’s first offer of 510 pence in Aug as well as another revised offer in Sept.

In considering the third offer, the independent directors say they took into account the challenges M&C faces in the medium term to address and adapt to changing market dynamics, as well as the implementation and successfully execution of several significant capital expenditure initiatives in multiple hotel locations.

CDL also reiterated its intention to maintain M&C’s business model as an owner and operator of hotel portfolio as a private company following a successful offer.

CDL’s offer also represented a premium of 21.4% to the closing price per M&C share of 455 pence on Oct 6, which is “within the range of premia paid in other UK take-private transactions undertaken by controlling shareholders”.

The independent directors had also regarded CDL’s prior statements that it “does not to intend to change its strategy with respect to asset ownership at M&C”. Neither was it M&C’s strategy to realise value through the sale or repurpose of its assets.

“Further, any significant asset disposal would require shareholder approval. Therefore the Independent Directors believe that a listed M&C would continue to trade as a hotel owner and operator and there would be limited opportunity for minority shareholders to benefit from a sale or repurposing of the assets of M&C as a listed entity in the medium term, if at all,” say M&C’s independent directors.

This article, written by PC Lee, first appeared in The Edge Singapore.

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