City Developments Limited (CDL) has announced that its subsidiary, CDL Hotels Holdings New Zealand Limited (CDLHH NZ), will be making an offer to acquire the remaining shares of New Zealand-listed Millennium & Copthorne Hotels New Zealand Limited (MCK) for NZ$2.25 ($1.72) each. This offer, if accepted, will be followed by the delisting and privatization of MCK by CDL, streamlining the ownership structure of CDL’s New Zealand entities.
MCK currently owns, leases, or holds franchises for 18 hotels in New Zealand, as well as having a majority stake in CDL Investments New Zealand Limited and interests in Australian properties through its Kingsgate Group subsidiaries. As of Jan 17, CDLHH NZ holds 80.02 million shares in MCK, representing a 75.86% stake based on 105.48 million MCK shares in issue. If CDLHH NZ acquires enough shares to trigger the compulsory acquisition provisions of the New Zealand takeovers code, it will acquire all remaining shares in MCK, as well as potentially redeeming the non-voting redeemable preference shares issued by MCK.
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CDLHH NZ is willing to acquire the non-voting redeemable preference shares for NZ$1.70 or approximately $1.30 each, purchasing them through Craigs Investment Partners on the Main Board of the New Zealand Stock Exchange (NZX). As of Jan 17, CDLHH NZ holds 91.34%, or 48.17 million, of MCK’s non-voting redeemable preference shares. If all MCK shareholders accept the offer, CDLHH NZ will pay a total of NZ$57.29 million. Additionally, CDLHH NZ expects to pay approximately NZ$7.77 million for all the redeemable preference shares it intends to acquire.
The offer price for both MCK’s shares and redeemable preference shares takes into account its current and historical market price, as well as the industry and business environment in which MCK operates. For the first half of its fiscal year 2024, which ended on June 30, 2024, MCK reported a net asset value (NAV) of NZ$532.02 million and a net tangible asset value (NTA) of the same amount. As of June 30, 2024, the NAV and NTA attributable to the shares subject to the offer were estimated at around NZ$85.62 million each.
The offer is conditional upon CDLHH NZ obtaining at least 90% of the voting rights in MCK by 5pm on May 2, as well as receiving consent under the Overseas Investment Act 2005 and 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 significantly affect CDL’s earnings per share or net tangible assets for the fiscal year ending Dec 31, 2025.