Singaporean billionaire Kwek Leng Beng, the chairman of City Developments, on Monday defended his bid to take control of Millennium & Copthorne (M&C) Hotels after minority shareholders opposed the 2 billion pounds takeover offer.
City Developments (CDL) is a part of Singapore-headquarterd Hong Leong Group, headed by Kwek, who is also the chairman of M&C. City Developments already own about 65 percent stake in M&C.
CDL offered 620 pence per share in cash to acquire the 34.8 percent of the hotelier that it does not already own, however, minority investors rebuffed the offer saying it put too low a price on the business because it did not reflect the value of its extensive property portfolio.
Three minority investors in the hotel chain, namely International Value Advisers, MSD Partners, and Classic Fund Management urged other investors to join them and block the bid.
Kwek said the investment firms' argument was "somewhat disingenuous" and based on "the false premise of unrealised real estate value".
"The CDL board sincerely hopes that the actions of a few shareholders who have entered since the financial crisis will not preclude a number of long-term shareholders from being able to take advantage of this offer to exit from their holding in an illiquid stock at a real and significant premium," Kwek said in the letter.
M&C has over 130 hotels spread across 17 countries, including the gateway cities of London, New York, Paris, Auckland, Dubai, Beijing and Singapore.
Kwek said in his letter that CDL's board had carefully considered the arguments put forward by a "small number" of M&C investors, who want the bid to be based on the company's net asset value (NAV).
He said that "these valuations only exist in theory and if attempts were made to crystallise them, would prove ethereal".
