HNA Group has closed its acquisition of Carlson Hotels, adding to its holdings in the hotel sector, which include stakes in Red Lion, Hilton Worldwide and NH Hotels Group.
The closing of the deal started the clock on HNA’s decision on whether to acquire the remainder of Rezidor Hotel Group or sell down its stake, with the company expected to acquire, building a significant holding in Europe.
HNA acquired Carlson Hotels for an undisclosed fee, thought to be around USD2bn. The deal includes Carlson’s 51.3% majority stake in master licensee Rezidor Hotel Group. At the time of writing, Rezidor’s market capitalisation was SKr5.9bn (USD730m).
HNA now has four weeks to decide whether it makes an offer for the remaining shares in Rezidor or sell down its ownership to below 30%, giving a deadline of 4 January.
The minimum price would be based on the 20-trading day volume weighted average price immediately before the announcement on 28 April.
Rezidor Hotel Group president & CEO, Wolfgang Neumann has previously told this publication: “Logic would tell us that they want to take full control of the company. They are very driven, they have a clear ambition to be a leading player in the hospitality sector.
“There are many opportunities ahead – China is a key market. We know that the Chinese companies have become very professional and that there are many companies which have grown under their ownership. We have a very good track record – we have turned the company around in the past two years and with HNA could see our growth ambitions accelerating.”
The group will remain at its current headquarters in Minneapolis. It currently includes 1,400 hotels in operation and under development with more than 220,000 rooms. David Berg, Carlson Hospitality Group CEO, who will remain at the helm, said at the time the deal was announced: “We are joining a Global Fortune 500 company with operations across aviation, tourism, hospitality, and more; a company with the aspiration to be one of the 50 largest companies in the world by 2030.”
Bai Haibo, HNA Tourism Group board member & HNA Hospitality Group’s chairman & CEO, said: “Carlson Hotels’ global success …we will build upon as part of this combination to establish our presence in the US market and expand our footprint in hospitality internationally. We look forward to working together …to accelerate growth by investing substantially in the business.”
HNA said that the combined companies would have “increased ability to accelerate growth through investments in areas such as digital, owned assets in major gateway cities, building of Radisson RED and other new brands”.
The deal completes at the end of what has been a busy year for HNA Group. Most recently the company paid USD6.5bn for a 25% equity interest in Hilton Worldwide, acquiring the stake from Blackstone Group.
HNA has agreed to restrictions on its ability to sell any of its interest in Hilton for a two-year period, and to limitations on buying more than 25% of Hilton’s outstanding shares, without the operator’s consent. The agreement allows HNA to appoint two directors – one HNA member and one independent member – to Hilton’s board.
Commenting on the HNA deal to analysts at the Hilton investor day, president & CEO Chris Nassetta said: “It enhances our relationship in China. Our relationship with Plateno is worth noting, we’re going to have 400, to 500 Hamptons, following the demand patterns.We’re ahead of the game. It isn’t always going to be a luxury game or an upper-upscale game.
“The HNA Group deal is just the next step. They are faring 200 million passengers a year on
their airlines. They have tens of millions of loyalty members. They have the number two online travel agent, the number one tour operator business in all of China. And so the idea is to connect all of our assets together.T he idea is to connect all our assets together – they have every incentive to want us to be successful and take advantage of the commercial synergies that we have. I think HNA is super-powerful and we’re at the tip of the iceberg on working out how to tap into that.”
Still outstanding, and of great interest to Rezidor Hotel Group, are the difficulties at NH Hotels Group, in which HNA has a 28.5% stake and which we discuss elsewhere in this week’s issue.
HA Perspective [by Katherine Doggrell]: On the belief that a picture tells a thousand words, here at Hotel Analyst we are currently working up a visual to display the convoluted Venn Diagram that is China’s holdings in the hotel sector. Expect delays as, much with public transport, the status is in constant flux.
That flux could, with the closing of this deal at least, see a pause in the frenetic nature of the activity. Although there has been much protestation on both sides about conflicts of interest at NH Hotels Group, all parties seem to want a takeover by HNA Group and, once some outstanding matters related to Hesperia have been cleared up – which appears to be underway – it is likely that HNA will have a serious footprint in Europe.
It is not alone in its aspirations in the region and AccorHotels Group may well be wishing that its position with its 14.98% shareholder, Jin Jiang International. In an interview with Le Figaro at the beginning of this month, Huazhu CEO Qi Ji said that Jin Jiang was “neither a menace nor a problem” with regards his group’s relationship with AccorHotels (the latter holds a 10% stake and the two have a development agreement in China).
AccorHotels’ president & CEO Sébastien Bazin has publicly described Jin Jiang’s stakebuilding as “friendly” but behind the scenes has been reportedly looking for a white knight to fend off the group. Jin Jiang also owns Louvre Hotels Group, which it bought from Starwood Capital for a reported EUR1.2bn. This was expected to form the basis of a platform in Europe. HNA picking up Rezidor is likely to bring added focus to that ambition.