MCK currently owns, leases or has under franchise 18 hotels in New Zealand. It also has a majority stake in CDL Investments New Zealand Limited and has interests in properties in Australia through its Kingsgate Group subsidiaries.
At the close of trading on Jan 17, which is the last full day of trading before the notice of intention, CDLHH NZ holds 80.02 million shares in MCK, representing a 75.86% stake based on 105.48 million MCK shares in issue.
Should CDLHH NZ hit the threshold to invoke the compulsory acquisition provisions of the New Zealand takeovers code, the group will compulsorily acquire all of the outstanding shares in MCK. CDLHH NZ may also choose to redeem the non-voting redeemable preference shares issued by MCK.
As the MCK non-voting redeemable preference shares are not included in the offer, CDLHH NZ says it is willing to acquire the shares at NZ$1.70 or around $1.30 apiece. The purchase will be made via its broker, Craigs Investment Partners, through buying on the Main Board of the New Zealand Stock Exchange (NZX). As at Jan 17, CDLHH NZ holds 91.34% – or 48.17 million – of MCK’s non-voting redeemable preference shares.
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If the offer is fully accepted by MCK’s shareholders, CDLHH NZ will pay a total consideration NZ$57.29 million. CDLHH NZ also expects to pay around NZ$7.77 million for all of the redeemable preference shares it seeks to acquire.
The offer price for MCK’s shares and redeemable preference shares factored in the prevailing and historical market price as well as the industry and business environment that MCK is operating in.
MCK recorded a net asset value (NAV) of NZ$532.02 million for the 1HFY2024 ended June 30, 2024, and a net tangible asset value (NTA) of the same. The NAV and NTA attributable to the MCK shares subject to the offer are around NZ$85.62 million each as at June 30, 2024.
The offer is conditional on CDLHH NZ receiving 90% or more of the voting rights in MCK by 5pm on May 2. It is also conditional with CDLHH NZ having to get consent under the Overseas Investment Act 2005 of New Zealand and the Overseas Investment Regulations 2005 of New Zealand for CDLHH NZ to own and control all the shares in MCK.
The implementation and payment of the offer is not expected to have a material impact on CDL’s earnings per share (EPS) or net tangible assets (NTA) for the FY2025 ending Dec 31.
As at 9.26am, shares in CDL are trading 3 cents higher or 0.59% up at $5.13.
