Minor International moved more assets outside Thailand on Wednesday when it announced the acquisition of 30 million shares of Madrid-based NH Hotel Group, increasing its position in the company to an 8.6% stake.
The transaction valued at €192 million (US$226 million) comes after Minor previously made a stock market purchase of NH shares that now accounts for approximately 1% of the 8.6% stake.
The news comes months after Minor denied a rumor that it was among the suitors for HNA Group’s 29.5% stake in NH. With this deal, Minor said it is now the second largest shareholder in NH on a fully diluted basis.
NH Hotel Group has a portfolio of 382 hotels and resorts with 59,350 keys spanning across 30 countries in Europe, the Americas and Africa. No management changes are expected in connection with the deal.
Minor added on Wednesday that this investment offers important strategic benefits, while its experience, especially in food and beverage after its acquisition last year in London-based Corbin and King, brings strategic value to NH. “The investment demonstrates Minor’s strategy of pursuing financially attractive investments which are accretive to Minor, with estimated EV/2018EBITDA of 10.6x,” it said in a statement.
The investment in NH Hotel Group represents a further move into Europe by Minor following its earlier expansion into Portugal and Brazil through the acquisition of Tivoli Hotels & Resorts in 2016, and one that is complementary to the geographical footprint of Minor’s pre-investment portfolio.
“We are excited by the opportunity to accelerate our global exposure with our investment in NH Hotel Group, which has a highly complementary business and asset portfolio to MINT,” said Minor Hotels CEO Dillip Rajakarier. “The investment is financially attractive, with high liquidity on the Madrid Stock Exchange and proven performance by the business. Over the past few years, NH Hotel Group’s board of directors and management team have re-invigorated the business and delivered strong business performance in line with its five-year strategic plan.”
Spain-based consultant Ivar Yuste told HOTELS on Wednesday that he sees Minor as “an industrial investor, not a financial player” with a strategy to move West. “So, the next chapter here is for Minor to bid for the entire HNA stake. It could do this in combination with a purchase of more Oceanworld shares,” Yuste said.
Yuste added that NH is clearly a takeover target. “In my view Minor’s move could make financial sense to some opportunist NH shareholders but it definitely does not make any sense for NH from a business standpoint,” he said. “Although it is true that Minor brings on board resort experience (that NH desperately needs), it is also a fact that NH has three times the size of Minor in room count.”
Yuste sees the likes of IHG or Hilton as a better takeover option for NH. “It is precisely this profile of group the one that would really be able to put into value NH portfolio,” he said. “NH needs to be integrated into a wider brand portfolio, build up its marketing and sales capabilities (the weakest aspect of any Spanish group) and incorporate its brand into a proper loyalty program.”