CDL, a real estate company, has announced through its subsidiary CDL Hotels Holdings New Zealand Limited (CDLHH NZ) that it will be offering NZ$2.25 ($1.72) for all the remaining shares of Millennium & Copthorne Hotels New Zealand Limited (MCK), a company listed in New Zealand. Once the offer is completed, CDL plans to delist and privatize MCK, simplifying the ownership structure of its New Zealand entities. MCK currently operates 18 hotels in New Zealand through ownership, lease, and franchise agreements. It also holds a majority stake in CDL Investments New Zealand Limited and has interests in properties in Australia through its Kingsgate Group subsidiaries.
As of January 17, the day before the offer was announced, CDLHH NZ already holds a 75.86% stake in MCK through 80.02 million shares. If CDLHH NZ reaches the threshold for compulsory acquisition according to the New Zealand takeovers code, it will acquire the remaining shares in MCK. CDLHH NZ may also choose to redeem the non-voting redeemable preference shares issued by MCK, which are not included in the offer. The purchase will be made through CDL’s broker, Craigs Investment Partners, on the Main Board of the New Zealand Stock Exchange (NZX). As of January 17, CDLHH NZ already holds 91.34% (48.17 million) of MCK’s non-voting redeemable preference shares.
If all the MCK shareholders accept the offer, CDLHH NZ will pay NZ$57.29 million. Additionally, CDLHH NZ expects to pay approximately NZ$7.77 million for the redeemable preference shares it seeks to acquire. The offer price was determined by considering the current and historical market price as well as the industry and business environment in which MCK operates. According to MCK’s financial report for the first half of FY2024, its net asset value (NAV) was NZ$532.02 million as of June 30, 2024, and its net tangible asset value (NTA) was the same. The NAV and NTA attributable to the MCK shares subject to the offer were approximately NZ$85.62 million each as of June 30, 2024.
The offer is subject to certain conditions, including CDLHH NZ obtaining at least 90% of the voting rights in MCK by May 2, and obtaining approval under the Overseas Investment Act 2005 of New Zealand and the Overseas Investment Regulations 2005 of New Zealand for CDLHH NZ to own and control all of MCK’s shares.
The implementation and payment of the offer are not expected to have a significant impact on CDL’s earnings per share (EPS) or net tangible assets (NTA) for the fiscal year 2025 ending December 31.