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CDL will not extend offer for M&C beyond Jan 26; investors must vote by Jan 23
SOME uncertainty surrounding the future of London-listed Millennium & Copthorne Hotels (M&C) could clear up next week, with City Developments (CDL) saying on Wednesday that its final offer for M&C will not be extended beyond Jan 26 if it does not garner enough acceptances for the bid to turn unconditional by then.
CDL owns 65.2 per cent of M&C, and will need approval from 50 per cent of M&C's remaining shareholders before it can privatise the property group. CDL is excluded from voting.
For now, it is too early to say if CDL will succeed or not.
Outside of CDL, shareholding in M&C is concentrated in the hands of a few large investors, some of whom have made loud objections to CDL's "low-ball" offer and attempts to play down the value of the asset-rich hotel company.
MSD Partners, International Value Advisers and Classic Fund Management, which together account for about 37 per cent of the shares that will vote on the offer, last month urged investors to reject the offer.
MSD has bought more shares in M&C since then but declined to comment on Wednesday.
Aberdeen Standard Life, with a 4.22 per cent stake in M&C, also declined to comment to The Business Times as it has not yet decided how it will vote.
The deadline for M&C investors to cast their votes is Jan 23. An announcement on the level of acceptances will go out shortly after that.
M&C shares traded at 564 pence a share as at 12pm London time on Wednesday, below CDL's offer price of 620 pence per share, presenting an opportunity for shareholders who wish to cash out of M&C sooner.
CDL first proposed the buyout in October last year, later raising its offer price from 552.5 pence to 620 pence a share.
But M&C investors gripe that CDL's offer represents a 25 per cent discount to M&C's stated book value at the end of 2016, which is based largely on historical valuations done as far back as 2003.
A more recent valuation report furnished to shareholders on Dec 8 showed a 51 per cent premium to the book value for M&C's hotels in London and New York.
CDL has committed not to unlock any value in M&C's London and New York assets for the next three years.
Still, a deal would be good for CDL in the medium-term, Maybank Kim Eng property analyst Derrick Heng said: "If they can eventually bring M&C up to potential, then shareholders would gain."
Kwek Leng Beng, who is the executive chairman of CDL and chairman of M&C, warned last month that if M&C shareholders reject CDL's offer, then they would have to share the burden of the "significant capital expenditure that is required simply to bring the M&C hotels into line with their competitors".
But one M&C investor who declined to be named blamed M&C's poor operating performance on management's reluctance to spend enough capex on its hotels, and said this would not be an issue for him.
Shares of CDL fell eight Singapore cents or 0.59 per cent to finish at S$13.40 on Wednesday.