CDL, a renowned real estate company, is planning to acquire the remaining shares of Millennium & Copthorne Hotels New Zealand Limited (MCK) through its subsidiary, CDL Hotels Holdings New Zealand Limited (CDLHH NZ). The offer stands at NZ$2.25 ($1.72) for each share, and upon completion, MCK will be delisted and privatized. This move will simplify the ownership structure of CDL’s New Zealand entities, as stated by the company in a filing on January 20.
Currently, MCK owns 18 hotels in New Zealand, either through ownership, leasing, or franchising. It also has interests in properties in Australia through its subsidiaries, Kingsgate Group. CDL has divested assets worth more than $600 million in 2024, further enhancing its position in the real estate market.
As of January 17, CDLHH NZ holds 80.02 million shares in MCK, representing a 75.86% stake. In case of reaching the compulsory acquisition threshold under the New Zealand takeovers code, CDLHH NZ will acquire all outstanding shares in MCK. The company may also choose to redeem the non-voting redeemable preference shares issued by MCK.
Although the offer price does not include the non-voting redeemable preference shares, CDLHH NZ has stated its willingness to acquire them at NZ$1.70 or approximately $1.30 per share. The purchase will be carried out through the company’s broker, Craigs Investment Partners, on the Main Board of the New Zealand Stock Exchange. As of January 17, CDLHH NZ holds 91.34% of MCK’s redeemable preference shares.
If all MCK shareholders accept the offer, CDLHH NZ will pay a total of NZ$57.29 million. The company also estimates an additional expense of NZ$7.77 million for redeemable preference shares it intends to acquire. The offer price takes into consideration the current and historical market prices, as well as the industry and business environment in which MCK operates. As of June 30, 2024, MCK recorded a net asset value of NZ$532.02 million and a net tangible asset value of the same amount. The NAV and NTA attributable to the MCK shares subject to the offer are approximately NZ$85.62 million each, as of June 30, 2024.
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The offer is subject to CDLHH NZ acquiring 90% or more of the voting rights in MCK by 5 pm on May 2. It also requires consent under the Overseas Investment Act 2005 of New Zealand and Overseas Investment Regulations 2005 of New Zealand. The implementation and payment of the offer are not expected to have a significant impact on CDL’s earnings per share or net tangible assets for the fiscal year ending December 31, 2025.