A conditional agreement has been signed through which International Hotel Investments (IHI), the investment arm of the Corinthia Group, will acquire the assets and operations of Island Hotels Group.
IHI has indicated a tentative enterprise value of €106.5 million and a net equity value of the Island Hotels Group of €50 million.
Among other operations, the Island Hotels Group runs the Radisson SAS hotels chain and Island Caterers.
In a statement, IHGH said it believed that an acquisition of its assets, management expertise and businesses by IHI represented an opportunity for IHGH shareholders to crystallise their investment at a fair price while continuing to form part of the future success of IHI.
IHI said it believed the acquisition would contribute significant synergies, gains and benefits.
These included operational synergies across the board and additional development opportunities that would arise as a result of an amalgamation of IHGH’s hotel operation in St George’s Bay with that of IHI’s own neighbouring hotels.
Both companies were also actively involved in the catering sector, in Malta and overseas. Their combined experiences would create efficiencies in existing operations all round, and provide a stronger platform for international growth.
The agreement is subject to the satisfaction of various conditions over the coming months, including but not limited to, compliance with regulatory requirements and obtaining shareholders’ approvals, as and where necessary, as well as, among other terms and conditions, conducting a satisfactory due diligence on IHGH.
Based on the completion of a satisfactory due diligence, and the indicative value confirmed, IHI has indicated that it would proceed with a voluntary offer for all the shares of IHGH in which the price for IHGH shares would be paid as to €1 in cash, split into two tranches, the first tranche of 55c payable on completion and the second tranche payable 12 months later.
IHGH shareholders would also receive 0.246 IHI shares for each IHG share held through the issue of nine million shares by IHI.
It is expected that, in due course, IHI and IHGH would make further announcements confirming the terms and conditions upon which IHI should proceed to make a voluntary offer for all the shares in IHGH in the event that all conditions were ultimately satisfied.
As part of the conditional agreement, the management of IHGH would remain unchanged and would continue to operate all IHGH businesses as normal.
The agreement also anticipated that the current jobs within the respective companies would be safeguarded.