City Developments Limited, a Singapore-based real estate company,* has made a £1.794-billion ($2.24 billion) bid for Millennium & Copthorne Hotels, which operates 190 hotels in 22 countries. CDL already owns approximately 65% of the hotel company.
SINGAPORE, 9 October 2017--Following a period of negotiation between the parties, City Developments Limited and the independent non-executive directors of Millennium & Copthorne Hotels plc (the "M&C Independent Directors") are pleased to announce that they have reached agreement on the price at which the M&C Independent Directors would recommend a possible cash offer to be made by Agapier Investments Limited, a wholly-owned subsidiary of CDL, to acquire all of the outstanding ordinary shares in M&C ("M&C Shares") that CDL and its subsidiaries do not already own (the "Proposed Offer").
Under the terms of the Proposed Offer, shareholders in M&C ("M&C Shareholders") would be entitled to receive 552.5 pence in cash for each M&C Share held (the "Proposed Offer Consideration").
The Proposed Offer Consideration represents:
- a premium of approximately 23.7 per cent. to the closing price per M&C Share of 446.7 pence on 18 August 2017 (being the last business day prior to the date on which an initial proposal was received by M&C from CDL);
- a premium of approximately 22.0 per cent. to the volume-weighted average share price of the M&C Shares of the period of one month prior to 6 October 2017 (being the last business day prior to the date of this announcement) of 452.7 pence per M&C Share; and
- a premium of approximately 21.4 per cent. to the closing price per M&C Share of 455.0 pence on 6 October 2017 (being the last business day prior to the date of this announcement).
The Proposed Offer Consideration would be made up of a cash amount of 545 pence per M&C Share payable by Agapier Investments Limited, together with a special dividend of 7.5 pence per M&C Share (the "Proposed Special Dividend") payable to all M&C Shareholders upon the offer becoming or being declared wholly unconditional.
The M&C Independent Directors, who do not include the appointees of CDL to the M&C board (such appointees being Kwek Leng Beng, Kwek Leng Peck and Kwek Eik Sheng), formed an independent committee to evaluate the Proposed Offer.
The M&C Independent Directors, who have been so advised by Credit Suisse, consider the financial terms of the Proposed Offer to be fair and reasonable. In providing advice to the M&C Independent Directors, Credit Suisse has taken into account the commercial assessments of the M&C Independent Directors. Accordingly, the M&C Independent Directors intend unanimously to recommend the Proposed Offer to M&C Shareholders, subject to finalisation of the other terms and conditions.
CDL confirms that it intends to maintain M&C's current business model, in particular to run the business as an owner and operator of its hotel portfolio. CDL also confirms it has no intention to sell or repurpose any of M&C's hotels in London or in New York.
As at 9 October 2017, CDL indirectly owns 211,749,487 M&C Shares, representing approximately 65.20 per cent. of the issued ordinary share capital of M&C. The Offer values the entire issued ordinary share capital of M&C at approximately £1,794 million.
Discussions on the other terms and conditions of the Proposed Offer, including which regulatory clearances the parties will be required to seek and obtain in relation to any offer, are ongoing between CDL and the M&C Independent Directors.
In accordance with Rule 2.6(a) of the Code, CDL is required, by not later than 5.00 p.m. on 6 November 2017, either to announce a firm intention to make an offer in accordance with Rule 2.7 of the Code or to announce that it does not intend to make an offer for M&C, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline can be extended with the consent of the Takeover Panel in accordance with Rule 2.6(c) of the Code.
CDL reserves the right to make an offer at any time at a price below 552.5 pence per M&C Share:
(a) if the actual diluted number of shares in M&C is greater than the assumed number of 325,403,550; or
(b) by the amount of any dividend (or other distribution) which is paid or becomes payable by M&C to its shareholders after the date of this announcement except for the Proposed Special Dividend, which the M&C Shareholders will be entitled to receive.
There can be no certainty that a formal offer will be made. The Proposed Offer will be made solely by certain offer documentation, which will set out the full terms and conditions of any offer.
A further statement will be made as appropriate.
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*Correction, 9 October 2017: A previous version of this story identified City Developments Limited as a real estate investment trust.