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Dublin-based European hotel operator Dalata Hotel Group has rebuffed a €1.3B non-binding bid offer from a consortium including Stockholm-based Pandox and Norway’s Eiendomsspar.
The bid value of €6.05 per share represents a 27% premium to Dalata’s stock before it announced a potential formal sale process as part of a wider strategy review in early March. Eiendomsspar already owns around 8.8% of Dalata’s shares.
Dalata said that the board had considered the offer but felt the bid "materially undervalues" the business and has "therefore unanimously rejected the Pandox possible offer."
The bidding partners said in a statement that they anticipated that the consortium would form a company that would be indirectly owned or controlled by Pandox and Eiendomsspar and that the latter would contribute its Dalata shareholding to the new company.
Ireland’s largest hotel operator hired Rothschild & Co. to advise on possible options including a sale of the business earlier this year, citing lacklustre share performance that Dalata chairman John Hennessy said failed to reflect the underlying value of the business and was hindering its ambitious expansion plans.
The bidders said that they were also currently in negotiations with a “reputable European hotel operator” to conclude a framework agreement for the operation of the Dalata hotels should the deal go ahead, according to their statement.
Dalata operates a portfolio of 55 hotels, mostly in Ireland and the UK but with an increasing presence in major British cities as well as continental Europe. It reported 7.3% revenue growth last year, while adjusted earnings before interest, taxes, depreciation and amortisation at €234.5M beat estimates.
Its current pipeline totals 1,867 rooms, including one hotel each in London and Madrid, two each in Edinburgh and Dublin — subject to Ireland’s Competition and Consumer Protection Commission — and three extensions to existing hotels. On completion, the total number of bedrooms will be over 13,500.
Pandox and Eiendomsspar added that “there can be no certainty that any offer will be made” and said that while the potential offer is currently intended to be made solely in cash, the terms could also be altered.
Pandox owns, develops and leases hotel properties to operators under long-term, turnover-based leases and has expanded its portfolio to 163 hotel properties with approximately 36,000 rooms across 11 countries in Northern Europe.
Eiendomsspar is one of the largest real estate owners in Norway and owns 11 hotels in the country with another two hotels under construction. Eiendomsspar controls circa 36% of the voting shares of Pandox.
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