A week ago, the board of Dalata Hotel Group rejected a €1.3 billion bid from the Nordic Pandox consortium, which had tabled a €6.05 a share, non-binding cash offer.
Dalata, which is led by chief executive Dermot Crowley, said the bid “materially undervalues the group and its prospects”. The market would seem to agree with the shares closing in Dublin yesterday at €6.25, some 3.3 per cent higher than the Pandox bid.
The Irish hotel chain is at the stage of second round bids, having effectively put itself up for sale on March 6th by announcing a strategic review.
Seems fair to assume that those bids place a higher value on the company than the Pandox offer.
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The Pandox consortium comprises Swiss hotel operator Pandox and Norwegian real estate group Eiendomsspar, which has a stake of 8.8 per cent in Dalata and a near quarter stake in the bidding consortium.
Eiendomsspar first emerged on the Dalata share register in October, the same month as Dalata held an investor day to outline its strategy as a listed company.
Pandox’s bid was a surprise, with the consortium bypassing the formal sales process in tabling its offer. Its 9 per cent stake isn’t in blocking territory to a takeover of the company by a third party, but it could make life difficult for whoever emerges as the preferred bidder from the sales process.
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Two other entities – Zahid Group and Helikon – hold 28 per cent of Dalata’s shares between them, putting them in blocking territory.
Dalata is a well-run, profitable hotel group with a strong track record (Covid years aside). It has paid regular dividends and completed share buybacks, and outlined an ambition to grow its footprint to 21,000 bedrooms by 2030.
Yet somewhere along the way, it appears that some long-term investors who weren’t impressed by its growth strategy or its decision to pay €84 million for the Radisson Blu hotel at Dublin Airport decided to bail on the group, opening the way for Pandox, Zahid, and Helikon to build their stakes.
This process has a long way to play out and a price closer to €7 a share might be required before a winner emerges. The only certainty is that Dalata will be checking out of the stock market.
