Meliá, Barceló and NH Implement Asset Light Model

2 September 2019

The major hospitality groups Barceló, Meliá and NH are taking advantage of the fervour in the Spanish real estate market to sell off some of their real estate holdings to interested funds and socimis. Many of the firms are implementing an asset rotation policy, shedding capital-intensive investments and looking to switch to a policy of hotel management and leasing.

To this end, Meliá, Barceló and NH have sold hotels worth approximately 500 million euros over the last two years as a wave of new investors, many socimis, have entered the market. Meliá began its asset-light policy a decade ago, and it is looking to increase the percentage of its EBITDA from its current 32% to 50% by 2024. In 2019, it accounted for just 2%.

Barceló is following the same sort of strategy, selling a hotel in Marbella to Hispania for €19 million. In 2017, Barceló sold 24% of its hotel sector Socimi Bay for €172 million, holding into long-term leases on the hotels.

NH, now part of the Thai group Minor, sold the NH Collection Barbizon Palace in Amsterdam to the German asset manager Deka for €156 million earlier this year, while also maintaining a 20-year lease on the property. NH has assets valued at €2.1 billion, including 350 hotels, with 54,000 rooms. Of those, NH only owns 76. The rest are leased or managed by the hospitality group.

Original Story: Expansión – Rebeca Arroyo

Adaptation/Translation: Richard D. K. Turner

SB Hotels Acquires Hotel NH Sebastian de los Reyes from HIP

24 June 2019Preferente.com

The Catalan hotel chain SB Hotels acquired its first hotel in Madrid, buying the 99-room San Sebastian de los Reyes, currently operated by NH. SB bought the hotel from HIP, a subsidiary of Blackstone, for an estimated 12 million euros.

NH’s lease ends in November and SB Hotels is already planning renovations after the summer of 2020. This is SB Hotels’ eighth unit in Spain. HIP has 62 assets and more 18,000 rooms.

Original Story: Preferente.com

Translation/Summary – Richard D. Turner

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

 

Minor Buys 26.5% of NH Hoteles from HNA for €622M

5 June 2018 – El País

The Thai company Minor International has purchased the Chinese conglomerate HNA’s 26.46% stake in NH Hotel Group for a total of €662.3 million, and has whereby become the largest shareholder of the Spanish hotel group, according to a statement filed on Tuesday by the Chinese company with Spain’s National Securities and Markets Commission (CNMV).

The operation has been divided into two tranches. On the one hand, HNA has sold a package of 65.85 million shares in the Spanish group, representing 17.64% of NH’s share capital, at a price of €6.40 per share, for a total of €421.4 million. That operation is expected to be closed by the middle of this month.

On the other hand, the Asian group has sold 32.93 million shares, representing 8.83% of NH’s share capital for €6.10 per share, equivalent to a total price of €200.9 million. Nevertheless, this second operation is subject to the execution of the first and is expected to be closed by the middle of September.

Forced takeover

Currently, Minor holds a 10.22% stake in NH, although it only holds 1.66% in shares. It holds the remaining 8.56% through financial instruments. When its acquisition of HNA’s stake is completed, Minor will be obliged to launch a takeover bid for 100% of the Spanish hotel group, as established by the law, as it will exceed the threshold of 30% of its share capital. The minimum price of that bid will have to be €6.40 per share.

Minor acquired its first stake in NH a month ago, with the purchase of 8.6% from the fund Oceanwood for €196 million, when it paid exactly the same price (€6.40 per share) that it will now pay HNA. Following that operation, Minor explained that “no management changes are expected” in NH in relation to its investment in the company, but it left the door open to expand its stake and, therefore, take absolute control over it.

Minor International Public Company Limited (MINT), the company that operates the Minor Hoteles brand, has 160 hotels, 2,000 restaurants and 400 outlets, most of which are located in South-East Asia. The firm’s market capitalisation amounts to around €4 billion.

Original story:El País (by Ramón Muñoz)

Translation: Carmel Drake

Thai Hotelier Minor Acquires 8.6% of NH from Oceanwood

23 May 2018 – Expansión

The Thai hotel company Minor Hotels Group has entered the shareholding of NH Hotels with the purchase of a package of 30 million shares, representing 8.6% of the Spanish hotel chain’s share capital, from the British investment fund Oceanwood for around €190 million, as revealed by Expansión.

The agreement reached between Oceanwood and the company headquartered in Bangkok has been closed for a price of €6.40 per share, slightly above NH’s share price at the end of trading yesterday (€6.35). The hotel chain’s share price has appreciated by 5.83% so far this year. Evercore has been the advisory bank to Minor. On the legal, Baker has advised the Thai firm whilst Garrigues has advised Oceanwood.

Minor, whose shares are listed in Bangkok, has a market capitalisation of USD 6 billion and owns 161 hotels in 26 countries. The chain is the owner of the brands Anantara, Avani, Elewana, Oaks and Tivoli and also operates establishments owned by the chains Four Seasons, Marriott and St. Regis.

The purchase of this share package makes Minor NH’s third-largest shareholder, behind the Chinese holding company NHA, with a 29.5% stake and Grupo Hesperia, in the hands of the businessman José Antonio Castro, with 9%. Oceanwood will continue as the fourth-largest shareholder, with almost 5%, although it will strengthen its weight after exercising the conversion rights of a convertible bond that it subscribed to five years ago and which it will execute soon. The fund first invested in NH in 2013 by purchasing stakes owned by the savings banks and has grown its share over the last few years.

In this way, as a consequence of the conversion of all of NH’s convertible bonds, Oceanwood will hold 9.5% of the share capital post-conversion, assuming that all of NH’s convertible bonds currently in circulation are converted.

The exit of the Chinese

This shareholder move comes in the middle of the divestment process being undertaken by HNA, which in January announced that it had engaged JPMorgan and Benedetto, Gartland and Company to “review” its shareholder position in NH and to identify potential buyers.

That decision by the Chinese group came after Barceló’s failed proposal to merge its businesses with those of its rival NH. The offer, which was overwhelmingly rejected by NH’s Board of Directors, stirred up rumours of a takeover once again. Last week, the Chinese group revealed that, after receiving interest from various investors, it plans to put its 29.5% stake up for sale.

NH, with 380 hotels and around 59,000 rooms, closed the first quarter of 2018 with a net profit of €21.7 million, compared with losses of €24.8 million during the same period in 2017.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Oceanwood to Strengthen its Position in NH Following €280M Capital Increase

8 May 2018 – Expansión

The British investment fund Oceanwood is going to strengthen its position in the hotel chain NH Hotel Group, of which it is currently the second largest shareholder with a 12% stake, following the capital increase that the company is expected to carry out in the near future.

The hotel chain is going to increase its share capital to finance a convertible bond issue undertaken in 2013, which is due to expire at the end of this year, but which may be exchanged for shares before the end of that period, in accordance with the conditions of the issue.

NH will handover 50.8 million shares to the bondholders, equivalent to 14.5% of the existing share capital. The company already has 7.5 million own shares, and so the capital increase will involve the issue of 43 million new shares, which at current market prices represents a total sum of around €280 million. With this operation, NH will manage to reduce its debt with the issue of new shares and will thereby advance with its objective to improve its level of leverage.

Of NH’s major shareholders, Oceanwood was the only one to participate in the issue, subscribing almost 30% of the debt, which means that its stake will amount to 15.5%, whilst HNA, with 29.5% of the share capital and Grupo Hespería, in the hands of the businessman José Antonio Castro, with 9%, will see their stakes in NH diluted. The price of the conversion was set at €4.92 per share back in the day, whereas NH’s share price closed yesterday at €6.43, which implies a 30% appreciation over the conversion price.

Although the bond is not due to expire until November, the Board of Directors has the authority to force its conversion ahead of time given that one of the conditions included to that effect in the brochure has been fulfilled. Specifically, the conditions of the issue indicated that in the event that NH’s share price rises above €6.39 for more than 20 days during a 30 day period, then the company could force the conversion. That situation was achieved last week. The board met on Wednesday to present the company’s results.

Last October, NH announced that it had fully repaid and cancelled all of the senior debt obligations issued amounting to €250 million, with maturity in 2019 and whose principal pending payment amounted to €100 million.

The group’s gross debt amounted to €736 million at the end of last year and the bulk of that debt is due to mature in 2023.

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

AC Hoteles Plans To Open One Hotel A Week

7 November 2017 – Expansión

AC Hoteles by Marriott, one of the main Spanish hotel chains, plans to open 57 new establishments around the world between now and the end of 2018. Moreover, 12 of them will be launched before the end of 2017, according to the company’s President, Antonio Catalán.

“We are opening one hotel a week”, explained Catalán (Corella, Navarra, 1948) in an interview with Efe, in which he described the “spectacular” growth of the chain, which plans to have 190 hotels in total between 2017 and 2018, mainly in the USA and Europe.

Marriot Internacional acquired 50% of the AC brand in 2011 and since then, has rolled out establishments around the world and has started expansion into Asia. The chain forecasts turnover of €400 million this year, up by 20% compared to 2016. The US group contributed 110 million loyalty card holders to the group. “Marriott was a real coup”, said Catalán, who added that “the group has shown that it is there (for us) when the going gets tough”.

“Now, the company is completely healthy following the crisis and has no debt whatsoever”. Catalán founded the NH chain in 1977 when he purchased a hotel in Pamplona. In 1997, he decided to sell his stake and create AC. That chain now has 3,500 employees in Spain and 7,000 in the rest of the world. “I always talk about the big AC family; we do unusual things when it comes to recruitment. We don’t use temporary contracts”, says Catalán, whose aim “is not to earn millions at the expense of his employees”. (…).

Original story: Expansión

Translation: Carmel Drake