• HNA quiet on Rezidor leadership

HNA Tourism Group has released its offer document for the 49.7% of Rezidor Hotel Group’s shares it does not own as a result of acquiring Carlson Hotels.

The company said it had not as yet made any decisions relating to Rezidor’s management, one week after appointing Federico González Tejera, the former CEO at NH Hotel Group, to lead Carlson Hotels.

Rezidor’s board will now evaluate the offer, with a decision expected no later than two weeks prior to the expiry of the acceptance period on 10 March. The company confirmed to this publication that it currently had no comment to make.

HNA Tourism Group announced a mandatory public offer to the shareholders in Rezidor Hotel Group to acquire all shares for a cash consideration of SKr34.86 per share. The aggregate value of the offer amounts to approximately SEK2.9bn (USD329m).

The bid price was below Rezidor’s 22 December closing price of SKr37.20, but above the group’s closing share price of SKr32.10 the day prior to the announcement on 28 April of HNA’s bid for Carlson Hotels. The offered price represents a premium of 7.7% compared to the volume-weighted average price for the Rezidor shares of SEK32.38 during the six months up to and including 27 April 2016 (the last trading day prior to the announcement that HNA Tourism Group had entered into an agreement to acquire Carlson Hotels).

The offer has been made by HNA Tourism Group subsidiary HNA Sweden, with the company commenting that it was fully funded by available funds within HNA.

After Carlson Hotels, JP Morgan and Fidelity are the largest shareholders in Rezidor Hotel Group, with 4.32% and 3.04% respectively.

HNA Tourism Group said that the deal to acquire Carlson Hotels was consistent with its strategy “to develop a global hospitality platform supported by recognised brands and premium operators across Asia, the Americas and Europe”.

HNA Tourism Group said that it had not made any decisions on any changes to Rezidor’s management or employees, or locations of business. In the offer document, HNA Tourism said it viewed “significant value on the competence of Rezidor’s management and its employees”.

Wolfgang Neumann has been president and CEO since 2013, having previously held a number of roles at Hilton, including president, Europe, a company in which HNA Group is due to acquire a 25% stake, with the transaction due to close in the first quarter of this year.

Neumann has already held talks with HNA Group, in Stockholm, shortly after the Carlson deal was announced, commenting to us at the time that the meeting had been “very positive, very constructive”. He said: “This is a company with a clear strategy and vision and the necessary funding to pursue that strategy. 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.”

Neumann added that HNA could view real estate “in a different way” to the company’s current asset-light strategy, potentially relating to leases, which the group has been exiting.

Neumann had been viewed by many in the sector as the natural choice to lead the enlarged group, but the week prior to the offer document being released saw HNA Tourism Group appoint Federico González Tejera, the former CEO at NH Hotel Group, to lead Carlson Hotels, replacing David Berg as CEO.

HNA Group also appointed former NH Hotel Group chairman, Charles Mobus, to the board of directors at Carlson.

Mobus and González were removed from the board at NH Hotel Group last summer, after the group’s AGM, at which activist shareholders Oceanwood Capital and Hesperia took control of the board, driving a vote by the “overwhelming decision” of shareholders that there was a conflict of interest with HNA Group board members.

HA Perspective [by Katherine Doggrell]: At the time of going to press, Rezidor Hotel Group had just released its full-year business development highlights. The company saw strong growth momentum in 2016, adding 45 new hotels totalling 8,200 rooms to its solid pipeline, and opening 18 hotels with nearly 3,600 rooms.

We’re all very fond of good news here at Hotel Analyst, but the timing struck this correspondent as curious, coming as it did in the same week as the group’s results. But not when you consider its focus, which is on the group’s development ability. Over the years, Rezidor has developed a reputation for doing the deals which others cannot – most notably streaking ahead in Russia and Africa.

Which brings us to the future of Neumann and his team. A source close to us suggests that while HNA is likely to pick up Rezidor unhindered, it may then sell off parts of it. With Neumann passed over at Carlson, will he lead a hived-off chunk of Rezidor?

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