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CDL Holdings Limited (CDL) has announced its intention to offer NZ$2.25 ($1.72) per share for all outstanding shares of Millennium & Copthorne Hotels New Zealand Limited (MCK), a New Zealand-listed company. This offer, made through CDL’s subsidiary CDL Hotels Holdings New Zealand Limited (CDLHH NZ), aims to delist and privatise MCK after its completion. This move is expected to simplify the ownership structure of CDL’s New Zealand entities, according to a filing made on Jan 20.
At the time of the offer, MCK owns, leases, or has under franchise a total of 18 hotels in New Zealand. It also holds a majority stake in CDL Investments New Zealand Limited and has interests in properties in Australia through its Kingsgate Group subsidiaries. CDL has recently divested assets worth more than $600 million in 2024.
As of Jan 17, CDLHH NZ holds 80.02 million shares in MCK, representing a 75.86% stake based on the 105.48 million MCK shares in issue. If the offer is accepted by MCK’s shareholders, CDLHH NZ will pay a total of NZ$57.29 million. The offer is also conditional on CDLHH NZ receiving 90% or more of the voting rights in MCK by 5pm on May 2, as well as obtaining consent under the Overseas Investment Act 2005 of New Zealand and the Overseas Investment Regulations 2005 of New Zealand to own and control all the shares in MCK.
The offer price for MCK’s shares and redeemable preference shares takes into consideration the current and historical market price, as well as the industry and business environment in which MCK operates. As of June 30, 2024, MCK recorded a net asset value (NAV) and net tangible asset value (NTA) of NZ$532.02 million each for the 1HFY2024. Should the offer be fully accepted, CDLHH NZ will also pay around NZ$7.77 million to acquire all of the redeemable preference shares it seeks to acquire.
CDLHH NZ has also announced its willingness to acquire MCK’s non-voting redeemable preference shares at a price of NZ$1.70, or around $1.30 each, which it will purchase through its broker, Craigs Investment Partners, on the Main Board of the New Zealand Stock Exchange (NZX). As of Jan 17, CDLHH NZ holds a 91.34% stake in MCK’s non-voting redeemable preference shares, or 48.17 million shares in total.
The implementation and payment of the offer is not expected to have a material impact on CDL’s earnings per share (EPS) or net tangible assets (NTA) for the FY2025 ending Dec 31.