A Scandinavian consortium that had been circling Dalata Hotel Group has reached an agreement to buy the business for €1.4 billion.
The €6.45-a-share cash deal comes a little over six weeks after Oslo-based investment firm Eiendomsspar and Swedish hotel company Pandox, in which it owns an almost 25 per cent stake, elbowed into the sales process with a €1.3 billion bid. This was rejected by the Dublin-listed company.
The consortium has signed up Scandic Hotels Group, which is almost 15 per cent owned by Eiendomsspar and runs 264 hotels, mainly on short-term leases, to run the Dalata portfolio following a purchase.
Scandic will pay €500 million for the operating business, it said in a separate statement. Scandic has committed to retaining Dalata’s central office in Dublin.
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Dalata’s chief executive Dermot Crowley told The Irish Times that he plans to remain with the business “for the foreseeable future”. The Irish company has about 5,500 employees.
While Dalata’s advisers, Rothschild, had been running a sales process of the group at the time, the consortium had initially declined to participate in the formal process.
However, both sides began to engage properly after the Nordic group made an improved offer on June 24th and Dalata gave it access to a virtual data room to carry out further due diligence with a view to improving is proposal further.
The final bid is 40 cents above the initial bid, 10c higher than the second proposal, and marks a 35.5 per cent premium to Dalata’s stock before the board launched a strategic review in early March.
Mr Crowley said that there was good interest from both trade and financial parties. However, he declined to comment on how many made bids.
“We believe that it is the right path forward for all stakeholders, and that it positions the business strongly for its next phase of growth under new ownership,” said Dalata chairman John Hennessy.
Dalata, perhaps best known for its Clayton and Maldron hotel brands, operates a portfolio of 56 hotels in mostly central locations, about three-quarters of which are in Dublin and London. It comprises of freehold, leasehold and managed hotels.
[ Dalata to open its first hotel in Berlin under Clayton brandOpens in new window ]
The board hired Rothschild in early March to carry out a strategic review and parallel sales process, after the stock had risen only 6 per cent over the previous four years, even as Dalata grew its portfolio at pace. The stock was trading about 25 per cent below to its inherent value, or net asset value, at the time.
Raising equity to further expand the portfolio made little sense with the stock trading at a deep discount.
The deal, which is subject to approval from Dalata shareholders, would be carried out through a new vehicle called Pandox Ireland Tuck Limited.
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The consortium has signed up Scandic Hotels Group, which is almost 15 per cent owned by Eiendomsspar and runs 264 hotels, mainly on short-term leases, to be the operating partner for the Dalata portfolio following a purchase.
Eiendomsspar, which has a history of large investments in hotels, first emerged with a disclosable stake above 3 per cent in Dalata at the end of October. it initially said that it saw the stake as a financial investment. The consortium currently own 9.7 per cent of Dalata.
“As the largest shareholder in Pandox and a joint offeror, we are enthusiastic about the acquisition of Dalata, which we view as one of the finest hotel companies in Northern Europe,” said Christian Ringnes, chairman of Eiendomsspar on Tuesday.
“We believe the combined forces of Pandox, Dalata and Scandic Hotels will provide strength and be a source of significant value creation.”
The acquisition would be financed from a combination of existing cash of the consortium and a facility provided by one of Pandox existing lenders, DNB Bank.
