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Bullish investors look past failed bid by CDL to privatise M&C Hotels

Singapore 

SHARES of City Developments (CDL) rose 26 Singapore cents or 1.97 per cent to finish at S$13.45 on Monday after an aborted attempt to buy out Millenium & Copthorne Hotels (M&C).

But the M&C deal had a slim chance of success from the outset and investors chasing CDL seem more preoccupied with Singapore's property market recovery than anything else.

Sales at CDL's high-end condominium project New Futura continue to progress well. As at Sunday, 35 of the 40 units released had been sold for an average selling price of S$3,200 psf, CDL told The Business Times on Monday.

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As for M&C, CDL allowed its 620 pence per share offer for the hotelier to lapse last Friday (Jan 26) after failing to get enough support from minority shareholders.

CDL owns 65.2 per cent of M&C, and needed approval from 50 per cent of M&C's remaining shareholders to take the group private.

At the close of the offer last Friday, CDL had received an acceptance level of 47.14 per cent, missing the mark.

Since it was first mooted, CDL's takeover offer drew loud objections from minority shareholders and fund managers who felt that CDL would be getting the asset-rich hotel company at a steal.

CDL later raised its offer to 620 pence per share, from 552.5 pence earlier, but maintained that valuations should be based on M&C operational performance, which is less impressive than its asset value.

A colourful exchange of open letters between three vocal minorities and CDL boss Kwek Leng Beng ensued, and then shareholders voted.

M&C will remain listed on the London Stock Exchange. Those who had accepted the offer will have their shares returned to them.

M&C's independent directors said in a statement last Friday: "After rejecting two proposed lower offers from CDL, the focus of the Independent Committee was to allow for M&C's minority shareholders to receive an offer.

"This was achieved and an acceptance condition was secured ... allowing holders of a majority of the independently held shares to decide the outcome.

"Shareholders have now spoken, we respect the result."

M&C shares fell 4.7 per cent to 546 pence last Friday, and last traded at 545 pence as at 8pm on Monday.

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