CDL, M&C defend buyout offer to soothe investors
Property giant City Developments (CDL) has moved to soothe angry shareholders that accused it of trying to buy minorities out on the cheap after it proposed to take over sister company Millennium & Copthorne Hotels (M&C) for £1.8 billion (S$3.2 billion).
The row began on Tuesday when fund managers from International Value Advisers, which holds 7 per cent of M&C, and MSD Partners, which has roughly 1.4 per cent, criticised the independent directors' recommendation to accept CDL's proposed cash offer of 552.5 pence a share.
Their key contention is that CDL's proposal implies a 32.5 per cent discount to M&C's 820 pence per share net asset value.
The fund managers also called for a valuation of the hotelier's property portfolio to be carried out to help minority investors assess the proposal, Reuters reported.
Aberdeen Standard Investments, with a 4.3 per cent stake, and Fidelity International, on 2.8 per cent, have also attacked the proposed offer.
To quell the disquiet, CDL and the M&C's independent directors issued a joint statement late on Thursday, noting that the hotel company has traded and continues to be valued by the market on an earnings basis, hence the discount.
The underlying value of M&C's 131 hotels is also not the best reference point, CDL said, since it has given its undertaking not to sell or repurpose any hotels in New York or London, and must seek approval from Britain's Panel on Takeovers and Mergers if it acts against this in the next 12 months.
M&C's independent directors noted that they had taken into consideration their advisers' review of certain assets in providing their recommendation.
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