City Developments Limited - OCBC Investment 2018-01-29: Unsuccessful Bid For M&C

City Developments Limited - OCBC Investment 2018-01-29: Unsuccessful Bid For M&C CITY DEVELOPMENTS LIMITED C09.SI

City Developments Limited - Unsuccessful Bid For M&C

  • City Developments Limited (CDL) announced over the weekend that its final cash offer for Millennium & Copthorne Hotels plc (M&C) has lapsed, with the former receiving only valid acceptances of ~47.14% which it does not already own. As such, this offer was not able to be declared unconditional. 
  • We expect a negative knee jerk reaction to CDL’s share price this morning. However, it should be noted that it remains business as usual for both parties and CDL will continue to be a controlling shareholder of M&C. 
  • Furthermore, CDL had announced previously that even if the offer had gone through, its intention would be to maintain M&C’s business model as an owner and operator of its hotel portfolio; it also has no intention to sell or repurpose any of M&C’s hotels for a period of three years after the offer period ends. Hence there would unlikely be any operational catalysts in the near term even if CDL had been successful in its bid. 
  • CDL’s management had also highlighted previously that if the final offer was not accepted, it would remain fully committed for M&C to address the operating challenges it faces as a public company. Given these points, we maintain BUY on CDL with an unchanged fair value of S$15.30.






Wong Teck Ching Andy CFA OCBC Investment | http://www.iocbc.com/ 2018-01-29
OCBC Investment SGX Stock Analyst Report BUY Maintain BUY 15.300 Same 15.300



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