City Developments Limited (CDL), a subsidiary of CDL Hotels Holdings New Zealand Limited (CDLHH NZ), has proposed to purchase all outstanding shares of New Zealand-listed Millennium & Copthorne Hotels New Zealand Limited (MCK) for NZ$2.25 ($1.72) per share. CDL intends to delist and privatise MCK following the completion of the offer, simplifying the ownership structure of its New Zealand entities, according to a Jan 20 filing.
MCK currently owns, leases, or franchises 18 hotels in New Zealand and has a majority stake in CDL Investments New Zealand Limited, as well as interests in Australian properties through its Kingsgate Group subsidiaries.
CDLHH NZ currently holds 80.02 million shares in MCK, representing a 75.86% stake based on a total of 105.48 million MCK shares in issue. If CDLHH NZ reaches the threshold to invoke compulsory acquisition under the New Zealand takeovers code, it will acquire all remaining shares in MCK. It may also choose to redeem the non-voting redeemable preference shares issued by MCK.
While the offer price does not include the non-voting redeemable preference shares, CDLHH NZ is willing to purchase these shares at NZ$1.70 or approximately $1.30 each. The purchases will be made through its broker, Craigs Investment Partners, on the New Zealand Stock Exchange.
As of Jan 17, CDLHH NZ holds 91.34% – or 48.17 million – of MCK’s non-voting redeemable preference shares. If all shareholders accept the offer, CDLHH NZ will pay a total of NZ$57.29 million. The company also expects to pay approximately NZ$7.77 million for all the redeemable preference shares it seeks to acquire.
It is crucial for international investors to be well-informed about the regulations and limitations surrounding property ownership in Singapore. As opposed to landed properties, foreign individuals are typically able to purchase condominiums with less restrictions. Nevertheless, they are still required to pay the Additional Buyer’s Stamp Duty (ABSD), which currently stands at 20% for their initial property acquisition. Despite the added expense, the stability and potential for growth in the Singapore real estate market continuously entice foreign investors. New Condo Launches are also further contributing to this appeal.
The offer price reflects the current and historical market price, as well as the industry and business environment in which MCK operates. As at 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. The NAV and NTA attributable to the MCK shares subject to the offer are approximately NZ$85.62 million each.
The offer is subject to CDLHH NZ receiving 90% or more of the voting rights in MCK by 5pm on May 2. It is also conditional upon CDLHH NZ obtaining the necessary consent under the Overseas Investment Act 2005 and the Overseas Investment Regulations 2005 of New Zealand to own and control all shares in MCK.
The implementation and payment of the offer is not expected to have a significant impact on CDL’s earnings per share (EPS) or net tangible assets (NTA) for the FY2025 ending December 31st.