After fending off a coup three years ago by United States group Parker Global Strategies and James Fielding’s Hotel Capital Partners, Grand Hotel Group is now the target of a $220 million takeover bid.
Malaysian hotel group Mulpha has made an off-market, cash offer to acquire all the securities on issue in GHG for 85 cents for the GHG through its Australian subsidiary of Mulpha Australia.
The offer is conditional, amongst other things, on Mulpha securing a relevant interest in more than 50% of the GHG Securities on issue.
Meanwhile, Mulpha has entered into the pre-bid acquisition agreement with Babcock & Brown, to buyout its 14.99% stake in GHG for 85 cents. The investment bank bought the stake from Parker Global Strategies in March 2004.
Babcock & Brown’s stake is included in the 50% offer condition.
Meanwhile, it is unclear what Singapore’s Tuan Sing Holdings, which holds a 25.42% in GHG will do.
Mulpha Australia’s executive chairman Lee Seng-Huang said GHG’s security holders can either crystallize their investment in the stock, or retain part of their securities to participate in a potential restoration of GHG’s value, through the commitment and clear leadership of Mulpha.
“Our track record speaks for itself,” he added.
Mulpha Australia and its subsidiaries, together the Mulpha Australia Group, has a significant property portfolio, including Hayman Great Barrier Reef, InterContinental Sydney, Hilton Melbourne Airport and Sanctuary Cove.
Mulpha Australia also holds approximately 61% of Mulpha FKP Pty Limited, the owner of the Norwest Business Park in Sydney. Mulpha also developed the Sydney Opera House Carpark and the Novotel Rockford Hotel Darling Harbour, formerly known as the Novotel Century.
Lee said since listing in 1996, GHG has under-performed the ASX 200 and the property trust sector, with low distributions and a subdued market performance.
“Mulpha intends, if possible, to retain GHG’s listing on the Australian Stock Exchange,” he added.
Babcock & Brown’s executive Trevor Loewensohn said GHG’s returns to security holders have for a long time been sub-standard and this has been in no small part due to the lack of a unified board vision and strategy for the group.
“As one of GHG’s largest existing security holders, we believe the cash offer will solve this dilemma, which has been hanging over the heads of GHG’s security holders. As a security holder we have sought to assist the Company in driving a new strategy to restore value, but have not been able to secure the support of the major security holder in this respect.
“Accordingly, we are happy to give Mulpha the opportunity to lead GHG in a new, positive direction”, he added.
In order to maintain the ASX listing of GHG and to comply with stock exchange rules in Malaysia, Mulpha has entered into an agreement with Hong Kong stockbroker, Sun Hung Kai, to place or failing which, purchase itself all GHG Securities acquired by Mulpha in excess of 60%. If Sun Hung Kai is required to purchase any GHG Securities under the agreement, it does not intend to be a long-term holder of the GHG Securities and intends to dispose of them in an orderly manner.
Mulpha intends, upon securing a controlling interest in GHG, to seek the election of a board majority, while supporting the continued membership of at least two independent directors to represent the interest of minority security holders.
In the meantime, GHG has strongly advised security holders to take no action and not to sell their shares.
GHG currently has seven hotel properties in Australia including four Hyatt hotels, two Chifley hotels and one Country Comfort hotels.
Three years ago, Parker Global Strategies unsuccessfully sought to overthrow GHG’s management board and replace it with Hotel Capital Partners.
By Adam Parsons
