Hesperia Acquires La Manga Resort from the Arum Group

31 July 2019

Hesperia Investor Group has reached an agreement with the Arum Group to acquire a controlling stake in the La Manga Club luxury resort. The 560-hectare resort is a tourist and residential complex with extensive sports and golf facilities and until now, was a part of the portfolio of assets of Inmogolf, a company linked to Arum. The two firms declined to reveal details of the transaction.

La Manga Club has a 192-room, five-star hotel, the Prince Felipe, which has a wide range of amenities, including an outdoor pool, gym, meeting rooms, a children’s club and playground, and an array of bars and restaurants. Also, the resort has 200 4-star flats for family vacations, with two swimming pools and restaurants. The residential complex also hosts a 2,000-m2 wellness centre, with thirteen treatment rooms, saunas, steam rooms, a training centre for athletes and a gym with a 25-meter indoor pool. The club itself has an enviable location, with three golf courses, facing the Mar Menor, the Mediterranean Sea and next to the Calblanque Natural Park.

La Manga Club will now join Hesperia’s portfolio of assets (both owned and managed), consisting of more than 5,000 rooms, 29 hotels, six resorts on the Peninsula and the Balearic and Canary Islands, along with 23 hotels in Spain’s principal cities.

The Arum Group, through its subsidiary Inmogolf, will continue to manage La Manga Club’s real estate business.  In turn, Hesperia is planning a series of investments to make La Manga the premiere resort in southern Europe.

Original Story: Cinco Dias

Adaptation/Translation: Richard D. K. Turner

Hyatt to Operate 2 of Hesperia’s Hotels in Madrid & Barcelona

7 March 2019 – Expansión

After breaking off its alliance with NH last year, following that firm’s takeover by the Thai Group Minor, Hesperia is now joining forces with Hyatt. The US hotel giant is going to take over the operation of the two jewels in Hesperia’s crown: the Hesperia Madrid and the Hesperia Barcelona Tower. Hyatt will operate the two 5-star properties on a franchise basis under its Hyatt Regency brand from Q4 2019.

This deal forms part of a broader strategic approach by Hesperia, which has also teamed up with Apple Leisure Group for the management of four of its holiday hotels.

Original story: Expansión (by R. Arroyo)

Translation: Carmel Drake

NH Breaks with AMResorts After Minor’s Entry

28 August 2018

The alliance to incorporate the subsidiary of Apple Leisure is frustrated in the middle of the Thai firm’s takeover bid.

The strategic alliance between the NH Hotel Group and the US-based Apple Leisure Group to jointly operate holiday hotel complexes in Europe, announced last May, has ground to a halt in the middle of the Thai group Minor’s takeover bid for 100% of NH.

Market sources explain that Minor’s participation in the firm, where it already controls 44.75% of the capital, has brought the alliance, which should have been signed at the end of last July, to an abrupt end.

The agreement involved the arrival of AMResorts, one of the subsidiaries of the US holding company, in Europe and opened the door for NH to expand in the holiday segment together with the North American company. The alliance was another step in the relationship that AMResorts had maintained with NH since 2011 when both companies established a similar model to operate three complexes in the Dominican Republic.

Under the agreement, currently halted, AM Resorts would have been in charge of brand management and the marketing of the resorts, while NH would maintain operational management. The first complexes in Europe were scheduled to open during 2019.

The American group planned to market three hotels with the AMResorts brand in Lanzarote, Fuerteventura and Mallorca from 2019. These hotels are owned by Hesperia and are managed by NH.

“The resorts will be brand conversions of existing hotels, which will be remodelled to adopt the standards of the AMResorts brands with which they will operate,” the companies indicated at the time.

Also, the alliance envisaged a greater partnership when evaluating “additional opportunities for conversions and new constructions,” that would allow the expansion of AMResorts in Europe and NH to extend its footprint in vacation resorts.

However, Minor’s participation in NH has put an end to the agreement.

The Thai group controls 1,75516,807 shares of NH, equal to 44.75% of the share capital of the Spanish firm and has launched a takeover bid for the rest, although it intends to control between 51% and 55% of NH and keep the group listed.

Alternatives

After the takeover by Minor, NH contracted Bank of America Merryl Lynch to evaluate the offer and look for alternatives.

So far, no white knight has appeared at NH’s door, except for Hyatt, which, despite having expressed interest in the Spanish network, has ruled out a counter-takeover bid, believing that the operation has little prospect of success with Minor controlling more than 44% of its capital.

The Thai group’s bid was accepted by the CNMV on July 19. After the approval of its shareholders and once the market’s supervisory body approves the deal, Minor expects to complete the transaction in October 2018.

Original Story: Expansion – Rebecca Arroyo

Translation: Richard Turner

 

Spain’s Competition Authority Approves Minor’s Takeover of NH

21 July 2018 – Expansión

Minor’s takeover of the NH Hotel Group is moving forward. The Spanish National Securities and Markets Commission (CNMV) admitted the offer from the Thai company Minor on Thursday and then, yesterday (Friday), Minor obtained approval from the Spanish and Portuguese competition authorities (CNMC). In this way, the offer is conditioned “exclusively” on its approval by Minor’s General Shareholders Meeting, which has been convened for 9 August. The Thai company currently controls 29.8% of NH’s share capital and, in September, plans to complete the purchase of an additional 8.4% stake from the Chinese firm HNA, which will increase its percentage stake to more than 38%.

The company, which is offering to pay €6.40 per share (€6.30 following the payment of the dividend approved by the General Shareholders’ Meeting) has indicated that its objective involves controlling between 51% and 55% of the Spanish group and for the remaining shares to continue to be listed. If that limit is exceeded, the company will consider making way for the entry of a financial partner in the share capital. Minor has also said that its objective involves increasing NH’s dividend by 50% next year to €0.15 per share.

The Thai group recorded revenues of €1.4 billion in 2017, has a market capitalisation of €3.9 billion and employs 66,000 people. With this operation, Minor will strengthen its hotel presence in America and Europe. Minor has 161 hotels and 20,384 rooms, primarily in Asia and Africa, whilst NH has 382 establishments and 59,350 rooms. Currently, the only markets in which the two chains have a presence are Brazil, Portugal and the United Kingdom.

At the General Shareholders’ Meeting held in June, the Chairman of NH’s Board, Alfredo Fernández Agras, described the offer as insufficient. Moreover, the President of Hesperia and CEO of NH, José Antonio Castro, expressed his criticism of the operation and his dissatisfaction with the Thai group’s entry onto the Board of Directors, where it now has three representatives.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Chinese Conglomerate HNA Wants to Sell its Stake in NH Hotels

19 January 2018 – El Mundo

The largest shareholder of NH Hotels, the Chinese conglomerate HNA, is considering the possibility of divesting its stake in the Spanish hotel group. It has engaged the entities JPMorgan and Benedetto Gartland to identify possible buyers for its 29.3% participation in the Spanish hotel chain.

The Chinese investor group has submitted this information to the National Securities and Markets Commission (CNMV), explaining that it has engaged the aforementioned entities “to review its shareholding position in the NH Hotel Group”, which it holds through its company Tangla Spain, “which includes the identification of possible buyers for its stake”.

It was only a week ago that the Board of NH unanimously rejected the merger proposed by the Barceló group. This possible sale could be driven by the need for liquidity but the rejection decision may have precipitated the move by the Chinese firm.

The Chinese investor group had entered NH in 2013 with an initial participation of 20% through the subscription of a capital increase amounting to €234.28 million, which it increased to 29.5% in November 2015, after purchasing the 8.33% stake that the entity Intesa Sanpaolo held in the listed hotel chain.

Nevertheless, the disagreements arose shortly after its entry into the Spanish group’s share capital. The purchase of Carlson Rezidor, a rival of the Spanish hotel group in certain markets, resulted in the exclusion of the Chinese company from NH’s Board due to a conflict of interest. The letters confirming these disagreements were made public and the parties even came to a head in the courts.

HNA needs to obtain liquidity to pay off a debt that it took out in 2015, after carrying out several acquisitions worth USD 40 billion (€32.65 billion). And in December, it announced its intention to sell assets worth US 6 billion (€4.897 billion).

By the middle of November, the Asian conglomerate had sold 1.14% of its share capital in the Spanish hotel group, which meant divesting 4 million shares, whereby obtaining some liquidity.

Based on the current composition of NH’s shareholders, HNA is followed by the investment fund Oceanwood, with 12%, and the Hesperia Investor Group, with 9%.

Original story: El Mundo (by Silvia Fernández)

Translation: Carmel Drake

NH Rejects Barceló’s Offer But is Willing to Consider Other Proposals

11 January 2018 – Expansión

Yesterday, the Board of Directors of the NH Hotel Group revealed its position regarding the proposal made by Barceló to merge the two businesses. And, although it expressed its “unanimous” rejection of the offer, it did say it was willing to consider future “strategic opportunities” within the framework of “the consolidation trends that are prevailing in the sector”.

“The Board has carefully considered the fact that the proposed structure – a merger – would not allow for the creation of value for our shareholders over and above that already forecast for NH operating independently”. In its analysis, the Board does not consider appropriate “either the intrinsic value assigned to NH by the Barceló Group’s offer, or its scope or the exchange ratio offered”, according to the explanation presented to the CNMV.

The Co-President of Barceló, Simón Pedro Barceló, sent a letter addressed to NH’s Board of Directors in November, proposing the integration of the two groups to create a “national champion” with more than 600 hotels and 110,000 rooms around the world, as Expansión revealed on 20 November.

The Mallorcan group proposed taking control of 60% of the resultant (merged) company and for the remaining 40% to end up in the hands of the shareholders of the NH Hotel Group. It also set the price of the latter at €7.08 per share, which meant valuing the company at €2.48 billion.

Exchange ratio

For NH’s most senior governing body, which met yesterday for the second time to analyse the proposal made by its competitor, the exchange ratio proposed by Barceló does not reflect the relative valuation of the two companies, nor does it incorporate a control premium over NH’s share value or take into account the potential appreciation in the firm’s share price operating independently. Moreover, NH’s directors emphasised that the offer does not open a window of liquidity for its shareholders. The offer – which is non-binding and conditional upon a due diligence (detailed analysis) – proposes an integration with NH Hotel in exchange for shares issued by the latter, with the resultant company being listed. This operation, therefore, would effectively allow Barceló – which is owned by the third generation of the family of the same name – to debut on the stock market.

“The Board has valued very negatively the fact that the offer from Grupo Barceló lacks liquidity for NH’s shareholders”, reiterated the Board of the listed company.

NH’s Board of Directors includes Alfredo Fernández Agras, representative of Oceanwood (with 12% of NH’s share capital); José Antonio Castro and Jordi Ferrer Graupera, both representatives of Hesperia, with a 9.1% stake; and Ramón Aragonés, CEO of NH. By contrast, HNA does not have a presence on the Board, despite being the majority shareholder, with a 29.5% stake. The Chinese giant was expelled (from the Board) in June 2016 due to a conflict of interest after it signed a purchase agreement with Carlson Rezidor, which competes with the Spanish firm in certain European countries.

Sources at Barceló expressed their respect regarding NH’s decision, although they acknowledged that the position adopted by their rival left them with “a bitter taste since they had not been able to convince the Board of the good intentions behind the operation”. And they added: “We think that the offer was good for the Spanish hotel industry, the shareholders of NH and Barceló and the economy of the country as a whole, which would have benefitted from having a national champion to go out and compete seriously overseas”.

In response to NH’s rejection, Barceló “said the discussion was over”. According to sources at the company, “no other proposals are possible”.

The decision of NH’s Board of Directors was made public at the end of trading. NH’s shares finished trading yesterday at a price of €6.115 per share, after rising by 1.83%. Since Barceló expressed its interest in NH, the share price of the latter has increased by 22% (…).

NH closed 2016 with sales of €1.475 billion, an EBITDA of €181 million and a net profit of €30.8 million. The group’s strategic plan for the next three years forecasts a recurring profit of €100 million and an EBITDA of up to €290 million in 2019.

Meanwhile, Barceló closed 2016 with turnover of €2.855 billion, net sales of €1.98 billion, an EBITDA of €339 million and a net profit of €125 million.

At the operating level, NH has 380 hotels and 59,000 rooms in more than thirty countries, whilst Barceló owns more than 230 hotels in 22 countries and almost 52,000 rooms.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

NH’s Board Will Assess Potential Merger with Barceló on 20 December

2 December 2017 – Expansión

Advisors / NH Hotel Group and Grupo Barceló have made initial contact through their advisor banks, Merrill Lynch and Banco Santander, respectively.

Progress is being made in what is shaping up to be the mega-operation of the decade in the hotel sector in Spain. The members of the most senior governing body of NH Hotel Group have agreed to meet on 20 December to study a possible merger with the firm’s rival Grupo Barceló.

At the meeting, NH’s Board of Directors will address the proposal made by its rival to integrate the businesses of the two groups and create a “national giant” with more than 600 hotels and 109,000 rooms around the world. This hotel giant would be controlled by Barceló (60% stake), and the current shareholders of NH would hold the remaining 40% share, as Expansión revealed on 20 November.

NH’s directors will consider preliminary reports from Merrill Lynch at this first meeting. The bank has been chosen by the hotel group’s management committee to analyse the operation.

The letter signed by Simón Pedro Barceló, Co-President of Grupo Barceló’s Board of Directors, is dated 14 November, which is when NH’s Board of Directors last met to approve the firm’s quarterly accounts. Nevertheless, the operation in question was not discussed at that meeting.

In his letter, Barceló proposed a period of up to three months to complete the preliminary work and submit a transaction proposal for approval by the governing bodies of both companies. Barceló, which in its offer letter values NH at €2,480 million, has engaged Banco Santander to analyse the operation. The financial advisors of the two companies are now in contact.

Stock price increase

NH’s shares have soared in value by more than 20% since Barceló announced its intention to integrate the two companies.

Barceló’s proposal values each NH share at €7.08, which would represent a premium of 17% over the current list price of €6.03. The endorsement of the market for this operation, as well as the first valuations of the advisor bank, will be one of the matters that the members of the Board will take into account.

NH’s most senior governing body is chaired by Alfredo Fernández Agras, who represents the British fund Oceanwood (which holds a 12% stake in NH). Moreover, its members include Ramón Aragonés –CEO of NH–, José Antonio Castro Sousa and Jordi Ferrer Graupera, both representatives of Hesperia.

The group chaired by Castro – a priori, one of the people who is most opposed to the agreement – announced on Monday that it had early repaid a loan granted by Santander for €122.7 million guaranteed by 31,870,384 NH shares, representing 9.1% of the share capital (its stake in the group).

To repay that loan, which was due to expire on 23 December 2017, the company has signed a new financing agreement with Société Générale for €97.55 million, guaranteed by the same shares, explain financial sources to Expansión.

By contrast, HNA does not have any representatives on the Board of Directors, even though it is the company’s largest shareholder, with a 29.5% stake.

The Chinese conglomerate was expelled in June 2016 due to a conflict of interest after it made an agreement to buy Carlson Rezidor, which competes with the Spanish firm in several European countries.

In its place, Paul Daniel Johnson, Fernando Lacadena Azpeitia, María Grecna and José María Cantero de Montes-Jovellar were appointed, at the request of the funds, to serve as independent directors. José María López-Elola González and José María Sagardoy also feature in that category.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Sale of Hesperia Tower Threatened by Catalan Political Uncertainty

27 November 2017 – Eje Prime

The political situation in Cataluña is also affecting the sale of tall buildings, such as that of the NH Collection Tower in Barcelona. Known until last year as the Hesperia Tower, this five-star hotel owned by Grupo Inversor Hesperia (Gihsa) is struggling to find a new owner due to the governmental instability and, therefore, economic uncertainty that exists in the region.

Located in L’Hospitalet de Llobregat, the asset is situated next to the Fira complex in the suburban town and has been on the market since December 2010. The Hesperia Group put this hotel, along with five others, on the market, due to the debt that was weighing down the company at the time, estimated to amount to more than €600 million.

Now, the interested companies are not willing to go ahead with the purchase of the asset due to the political situation in Cataluña, amongst other factors, according to Crónica Global.

A year ago, the hotel company repositioned Hesperia Tower within a plan agreed with NH Hoteles, which took over the management of 31 assets from the entity led by José Antonio Castro after paying €31 million. Hesperia’s current portfolio contains around thirty hotels in Spain, as well as a 9% stake in the NH hotel Group.

Original story: Eje Prime

Translation: Carmel Drake

Barceló Offers €2.48bn For NH & Sets 3-Month Negotiation Period

21 November 2017 – Expansión

To create a hotel colossus with more than 600 hotels and 109,000 rooms in Europe, Latin America and the USA, and one of the largest tourism companies in Spain. With this objective in mind, the Barceló group has initiated contact with the NH Hotel Group to propose one of the largest hotel mega-operations in recent years in Spain.

Barceló is offering a swap equation that involves valuing each NH share at €7.08. In other words, it is willing to pay €2.48 billion for the company in total. That valuation represents a premium of 27% over the group’s average share price during the three months leading up to 30 October, of €5.56. Moreover, that premium rises to 41% if we consider the company’s closing price last Friday of €5.

Yesterday at 12:30, Spain’s National Securities and Exchanges Commission (CNMV) lifted the suspension on trading that had been weighing down on NH’s shares, but the avalanche of purchase orders meant that it took another 45 minutes for the shares to actually start trading again. By the close of business, NH’s list price had soared by 11.8%, to €5.59. In this way, its market capitalisation rose from €1,751 million on Friday to exceed €1,950 million. So far this year, the hotel company has seen its share price rise by more than 46%, however, it is still well below the €14.70 per share that it reached in 2007, at the height of its stock market boom.

Barceló submitted to the CNMV a letter sent by Simón Pedro Barceló, Co-President of Group Barceló, to the Chairman of the Board of Directors of NH, Alfredo Fernández Agras, in which he proposes considering the merger of the two companies. According to the initial proposal, the Mallorca-based firm would end up owning 60% of the merged group. Barceló explains that his interest in this merger stems from “the great strategic sense and the exceptional potential for the creation of value for the shareholders of both companies”.

The letter also opens the door for the merged group’s corporate headquarters to be located in Madrid and it proposes that the maximum governing body of the merged company, in which Grupo Barceló would hold a majority stake, would have sufficient members to ensure that the existing shareholders of NH are represented.

Barceló proposes a merger, in other words, “the integration of Grupo Barceló and NH through the delivery of new shares issued by NH to Grupo Barceló, keeping the company listed”. “Our intention is to integrate all of the assets and liabilities of Grupo Barceló, including our Hotel and Travel divisions, which we believe could contribute value to the combined group. Nevertheless, we are willing to consider different alternatives regarding the perimeter of the assets and liabilities in order to facilitate the success of the transaction”, said Barceló.

Three months to reach an agreement

The offer, which is non-binding and conditional upon a due diligence (detailed analysis) provides for a period of “up to 3 months for the completion of this work, to reach an agreement between the two parties and submit a transaction to our respective governing bodies for definitive approval”. In fact, Barceló said that he is willing to consider alternatives with respect to the perimeter of the operation to facilitate it.

If the proposal ends up going ahead, it would result in the creation of the largest Spanish hotel group, ahead of Meliá, which at the end of 2016, had 375 hotels and 96,369 rooms. It would become one of the largest players in the sector in Europe, behind only the British firm InterContintental and the French company Accor.

Barceló has engaged Santander as financial advisor for the operation and has not hired any legal advisor.

NH views the offer with suspicion

From the get-go, the offer has been viewed with suspicion by NH, which indicated to the CNMV that it had received “an unsolicited, preliminary and non-binding expression of interest” from Barceló for the merger of the two businesses.

According to this offer, Barceló would have “a majority on the administrative board”. Moreover, NH reminded the regulator that its Board of Directors recently approved a 3-year strategic plan “involving an independent project for significant growth, which is still valid today”.

NH’s largest shareholder is the Chinese giant HNA, which holds a 29.5% stake, but it is not represented on the Board of Directors following its expulsion last year due to a conflict of interest. After HNA is the British fund Oceanwood, with a 12% stake; and Hesperia, the chain chaired by José Antonio Castro, with a 9% stake.

Analysts think the merger makes “strategic sense” 

Analysts at Renta 4 and Bankinter agree with Barceló that the operation makes “strategic sense”.

Original story: Expansión (by Rebeca Arroyo and M. L. Verbo)

Translation: Carmel Drake

Millenium Group Resumes Its Hotel Socimi’s Activity

15 March 2017 – Cinco Días

The Millenium group has resumed its plans to launch a hotel Socimi. Following a break caused by the absence of a Government and the misgivings of some of its investors, the company has returned to the project.

The aim of the firm led by Javier Illán, which has now constituted the Socimi Millenium Hotels Real Estate, involves listing the company on the stock market in 2019, whereby maximising the term permitted for that purpose. Meanwhile, the vehicle is working hard to secure high profile investors and acquire hotel establishments.

Millenium plans to raise around €400 million from investors and expects that its Socimi will have a market valuation of between €650 million and €700 million when its debuts. For the time being, the company does not have a registered advisor for its debut on the stock market, but it has received support from investors who have participated in its investments since 2000, including large homegrown and overseas real estate mutual institutions and pension funds.

For new investors, Millenium has established a minimum entry ticket of €5 million. Moreover, it has not ruled out the possibility of allowing hotel owners to take a share in its share capital in exchange for “gifting” the property to its portfolio. Regarding the debut on the stock market, the company may open up another stock tranche, with a lower minimum investment of around €250,000, to give liquidity to its shares.

The vehicle is expected to acquire around thirty hotels, including those that the group already owns, such as the Hesperia on Paseo de la Castellana, the Hotusa in Plaza de Castilla and the Tryp Chamberí, all in the centre of Madrid.

The Socimi will acquire urban and vacation hotels, however, Javier Illán states that they are also analysing cities that receive lots of tourist visitors. Besides Madrid and Barcelona, he points to other major capitals such as Málaga, Sevilla, Córdoba, Granada, Bilbao, San Sebastián and Valencia. The Canary Islands and the Balearic Islands, together with the Costa del Sol, will be its areas of focus in the vacation segment, all areas that have been under the spotlight of domestic and international investors alike, over the last year.

This year, Illán hopes to close around ten acquisitions on which he expects to spend around €200 million. He also acknowledges that the company is holding talks with all of the hotel chains interested in operating lease contracts.

For the time being, none of these operations has materialised and the hope is that they will be completed one by one and not in batches to avoid acquiring unwanted assets.

The Director also assures that he intends for 70% of the portfolio of establishments to require investment for their repositioning and refurbishment (value added, in English), which whereby differentiates it from the model adopted by Hispania in the vehicle that it created together with Barceló: Bay.

The group, which specialises in the development of luxury residential properties and commercial premises is carrying out detailed analysis with a view to creating a Board of Directors for the Socimi, which will mainly comprise independent directors.

Original story: Cinco Días (by L. Salces and A. Simón)

Translation: Carmel Drake