Sequoia China, Ocean Link plan to offer HK$1.51 billion in bid. Deal values New Century Hotel at about HK$5.2 billion.

A consortium led by buyout firms has offered to take Zhejiang New Century Hotel Management Co. private in a deal that would value the hotel chain operator at about HK$5.2 billion ($670 million).

Ocean Link and Sequoia Capital China proposed to pay HK$18.15 in cash for each New Century Hotel’s H-share they don’t already own, the company said in a filing on Wednesday, confirming an earlier Bloomberg News report. The offer represents a 24.7% premium to the last closing price in Hong Kong. The group will also make a cash offer for the hotel operator’s domestic shares.

The private equity firms will commit a total of HK$1.51 billion to the offer, with Sequoia China contributing 68% of the fund and the rest comes from Ocean Link, the statement said. The offer is subject to approvals by shareholders and China’s regulators.

Trading in New Century Hotel, which has been suspended since Tuesday morning, will resume on Thursday. The company had a market value of about HK$4 billion as of Monday. UBS Group AG is financial adviser to the offerer.

New Century Hotel, founded in 1988, manages more than 580 hotels in the world’s second largest economy, according to its website. It posted a net loss of 92 million yuan ($14 million) for the six months ended June 30 as the coronavirus outbreak weighed on its business. The company raised about HK$1.2 billion in its Hong Kong initial public offering in 2019.

Ocean Link, which focuses on China’s consumer, travel and telecommunications, media and technology sectors, was part of an investor group that agreed to take Inc. private last year in a deal valuing China’s biggest online classifieds firm at about $8.7 billion.


Source: Bloomberg

By Manuel Baigorri