CDL has maintained a majority shareholding of MCK since 1999 and increased its shareholding to 76 percent in late 2024. Photo: RNZ / Dan Cook
- Millennium & Copthorne independent directors tell shareholders to reject offer
- Majority shareholder offer barely half of independent valuation
- Offer $2.25 vs valuation $4.40-$5.00
The independent directors of hotel company Millennium & Copthorne (MCK) have told minority shareholders to reject a takeover offer from the majority shareholder because it is too low.
In January Hong Kong-owned City Developments (CDL), 76 percent owner of MCK, offered $2.25 a share to small shareholders for the rest of the company.
MCK's independent directors have released a report which values the company at between $4.50 and $5.00 a share, prompting a clear recommendation not to sell.
Independent chair Leslie Preston said the offer was barely half the bottom of the value range and clearly inadequate.
"It does not adequately reflect the market value of MCK's hotel and property assets or the recent investments made into refurbishments, upgrades and acquisitions," he said, adding it did not reflect the expected upside as tourism improved.
"If the major shareholder wishes to acquire all of MCK, it should pay an appropriate price."
MCK has a chain of 19 hotels through the country, a share in a Brisbane hotel, apartments in Sydney, and a majority stake in a residential property developer.
Unusual defiance
The independent directors' emphatic rejection of the offer is uncommon with most offers either agreed before being presented to shareholders or gaining the backing of key minority shareholders to get over the line.
The Shareholders' Association, which speaks out for small retail shareholders has in the past called for greater protection for minority investors from majority interests, such as preventing majority shareholders from voting on board appointments.
CDL group chief executive Sherman Kwek said in January the company was a supportive MCK shareholder, and the offer was fair and in the best interest of shareholders because it gave them certainty of value in an uncertain environment.
Meanwhile, the hotel group's annual profit fell 87 percent to $2.8 million despite a 21 percent rise in revenue, largely because of a large one-off $25.8m tax adjustment.
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