NH Reject Barcelo…HNA Need to Sell 29.5% Stake

Date: 2017 and January 2018

Location: 400 hotels in 30 countries

Name: NH Hotels (named after Navarra Hotels), founded in 1978 by Antonio Catalan.

nhow Hotel Berlin

Seller: Hainan Airlines was created in 1993 by Chen Feng. By 2000 Mr Feng has restructured the company to HNA Group Co. Ltd and had high hopes to be one of Top 50 Companies in the world by 2030! Oops it all went wrong in 2017.

By February 2017 HNA acquired 29.5% of shares in NH… having acquired Carlson Hotels in 2016 and 25% of Hilton, bought in 2016 for US$6.5bn!

Until the Chinese government stepped in and China formally implemented measures to limit and restrict what it called extensive overseas investments made by domestic groups. China’s State Council has released a guideline “to promote healthy growth of overseas investment and prevent risks.” Sectors on the restriction list include real estate, hotels, entertainment, sport clubs, outdated industries and projects in countries with no diplomatic relations with China.

So in January 2018, HNA has hired banks to look for buyers of its majority stake in Spain’s NH Hotel Group, just days after NH turned down a takeover offer from Spanish peer Barcelo.

The announcement also came a day after Reuters reported that the U.S. government would not approve any HNA investments in the United States until the Chinese aviation-to-property conglomerate provides adequate information on who its shareholders are.

HNA said it had hired JP Morgan and Benedetto, Gartland and Company to look for possible buyers of its 29.5 percent stake in Spain’s NH Hotel Group. The stake is valued at around 632 million euros at current prices.

Spain’s hotel industry is booming and investment in the sector reached a record 3.9 billion euros ($4.8 billion) in 2017, according to property consultant Irea.

Last year Spain overtook the United States to become the second most visited country in the world after France, with the number of tourists boosted by security concerns in some rival markets in the Middle East and North Africa.

Heavily indebted HNA Group have had an acrimonious relationship with NH. Its representatives were ejected from NH’s board in 2016 after HNA’s purchase of rival hotel group Carlson-Rezidor led to accusations of conflict of interest.

Barcelo: In November 2017, Barceló makes €2bn approach to NH Hotel Group. Combination would create biggest Spanish hotels group with €4bn revenues and Barceló said it would expect to control 60 per cent of a combined group.

Family-owned Barceló said at the time, that it was “expressing an interest” in combining with NH Hotel, potentially offering €7.08 a share, which is a 27 per cent premium to its three-month average stock price.

The non-binding potential takeover offer, which Barceló said was “preliminary”, would value NH Hotel, which operates nearly 400 hotels mainly in Europe and Latin America, at about €2.2bn.

The proposal comes as Spain’s tourism sector is booming, with a record 36m foreign visitors
in the first six months of 2017, a rise of more than 11 per cent on last year. This is the fourth consecutive year of record numbers of tourists.

The combined group would own about 600 hotels mainly in Europe and South America, with annual revenues of about €3.7bn.

But…. In January 2018, NH Hotel Group has declined the unsolicited bid from Barcelo Group after seeking advice from Bank of America Merrill Lynch.

It issued a statement today saying it was the unanimous decision of the Board of Directors to reject the proposed merger with Majorca-based Barcelo.

NH Group added: “The Board is keen to stress that its decision was taken in defence of the Company interest and all of its shareholders.

“The Board also emphasizes that this bid does not condition or impede the analysis of other strategic opportunities in the future, all of which would be evaluated on the basis of the real value they stand to generate for NH Hotel Group’s shareholders, within the framework of consolidation trends prevailing in the hotel industry.”

“Based on its analysis, the Board does not deem the intrinsic value assigned to NH in the bid presented by Grupo Barcelo, nor the exchange ratio offered, to be sufficient. Neither is the scope of the bid,” it added.

Barcelo operates about 230 hotels in more than 20 countries under four brands: Royal Hideaway Luxury Hotels & Resorts, Barcelo Hotels & Resorts, Occidental Hotels & Resorts and Allegro Hotels.



THPT Comment: Wow when the big boys spat, they talk in billiions! Certainly HNA need to dispose of some or all of their hotel assets…who might take the stake in NH? Clearly not Barcelo…but whom?

First Seen: Reuters, London’s FT, Travelmole