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Company PresentationAcquisition of Significant Shareholding in NH Hotel Group
June 2018
2
AGENDA:
TRANSACTION OVERVIEW
ACQUISITION RATIONALES
FINANCIAL COMPARISON
VALUE CREATION OPPORTUNITIES
3
TRANSACTION OVERVIEW
MINT is expanding its footprint through the acquisition of shares in NH Hotel Group to accelerate European exposure and enhance long-term growth trajectory.
TRANSACTION STRUCTURE
ESTIMATED TRANSACTION
SIZE
Tranche* Estimated Timeline
% Shareholding(fully-diluted)
Seller(s)
Oceanwood-1 & others Announced 9.5% Oceanwood & other minority shareholders
Oceanwood-2 15 Jun 3.6% Oceanwood
HNA-1 15 Jun 16.8% HNA
HNA-2 12 Sep 8.4% HNA
Total Pre-Tender Offer 38.2%
• In addition, MINT intends to follow National Securities Market Commission’s (CNMV) regulation and announce a Tender Offer for the remaining shares of NH Hotel Group
Euro million THB million*
The first 38.2% shareholding 948.4 35,829
Tender Offer up to 1,550.7 up to 58,583
Total up to 2,499.1 up to 94,412
TENDER OFFER PRICE
• Not lower than MINT’s highest acquisition price in the last 12 month-period, currently at EUR 6.40 per share (subject to fair price adjustments by CNMV)
(According to AGM agenda to be held on 21 June 2018, proposed dividend is EUR 0.10 per share, to be paid on 27 July 2018)
CONDITIONS PRECEDENT
• CNMV’s regulatory compliance and associated approval for the Tender Offer
• Clearance by relevant anti-trust authorities
• MINT’s EGM approval for HNA-2 Tranche & Tender Offer
* Note: at the exchange rate of THB 37.7785 / Euro
* Note: all tranches have standalone investment merits and approval processes Updated 12 June 2018
Updated 12 June 2018
4
TRANSACTION OVERVIEW
MINT’S INTENTIONS
• Target shareholding in NH Hotel Group of between 51%-55%
• Keep NH Hotel Group as a publicly-listed company on the Madrid Stock Exchange with strong corporate governance, whereby MINT will actively engage in conversations with NH Hotel Group’s existing investors on such intentions
• MINT will proactively pursue the above approach. However, should the tender offer result in shareholding of over 68% (or at the stretched exercise level of 73.5% as per below scenario), MINT has prepared for other funding options, including active conversations with financial partners
SOURCE OF FUND
• Below are the sources of fund required for each shareholding scenario, assuming consolidation of NH Hotel Group’s financials to MINT’s for proforma 2019 financials
(Euros million) % Shareholding
51.0% 55.0% 68.4% 73.5%
Corporate Bonds 1,294 1,396 1,283 1,331
Perpetual Bonds - - 452 534
Total Source of Fund 1,294 1,396 1,735 1,865
2019 Interest-bearing-debt / Equity 1.12x 1.20x 1.30x 1.56x
MINT’s target shareholding
MINT is expanding its footprint through the acquisition of shares in NH Hotel Group to accelerate European exposure and enhance long-term growth trajectory.
5
TRANSACTION OVERVIEW
MINT’S EGM AGENDA
• Shareholders’ approval of the investment in shares of NH Hotel Group both by way of block trade and tender offer (over 50% of Net Tangible Asset according to the SET rules and regulation)
• Shareholders’ approval of issuance of bonds, which when calculated with the aggregated amount of all outstanding debentures at any time, shall not exceed Baht 95 billion
* Note that the above agendas are conditional upon one another, and they both require at least ¾ of votes of shareholders who are present and entitled to vote
• MINT has received unanimous approval by all members of board of directors
TENTATIVE TIMELINE
June July Aug Sept Oct Nov
• Share Purchases
• MINT’s EGM
• Tender Offer*
15Purchase of HNA-1& Oceanwood-2 Purchase of HNA-2
9 MINT’s EGM
Tender Offer Process
* Note: In the case MINT announced a voluntary tender offer
12
MINT is expanding its footprint through the acquisition of shares in NH Hotel Group to accelerate European exposure and enhance long-term growth trajectory.
Updated 12 June 2018
6
AGENDA:
TRANSACTION OVERVIEW
ACQUISITION RATIONALES
FINANCIAL COMPARISON
VALUE CREATION OPPORTUNITIES
7
ACQUISITION RATIONALES
The acquisition offers improved overall growth profile of the portfolio, based on highly complementary assets.
Strategic Investment
in terms of brand, geography and hotel portfolio
Highly Attractive Assets
in hard-to-enter European markets in strategically attractive locations
Financially Attractive Investment
with attractive valuation and favorable upside potential
8
STRATEGIC INVESTMENT
NH Hotel Group’s portfolio is highly complementary to MINT’s, in terms of geography, brands and hotel portfolio, with limitedoverlap. While NH Hotel Group’s brands are strong in Europe and the Americas, Minor Hotels’ are reputable in Asia, Australia, the Middle East and Africa.
COMPLEMENTARY GEOGRAPHICAL FOOTPRINT WITH LIMITED OVERLAP
Minor Hotels NH Hotel Group Both Minor Hotels & NH Hotel Group
COMPLEMENTARY BRAND PORTFOLIO
Midscale
Upscale
Upper Upscale
Luxury
2 hotels62 hotels
The Americas
13 hotels317 hotels
Europe
47 hotels1 hotels
Africa & Middle East
99 hotels0 hotels
Asia & Oceania
*As of June 2018
9
FINANCIALLY ATTRACTIVE INVESTMENT
The investment in NH Hotel Group is financially attractive with favorable upside potential, backed by robust business fundamentals, high-caliber management team and proven disciplined approach to deliver consistent growth.
Revenue
EBITDA
NPAT
EUR million
1,395 1,475 1,571 1,645 1,722
2015 2016 2017 2018E 2019E
150 181 233 260
286
-3
11 35
92 100
Attractive Valuations
• 10.6x EV/2018EBITDA multiple, a highly attractive valuation for high quality assets in key gateway cities in Europe
• Precedent transactions in the sector at over 12x average EV/EBITDA
Favorable Upside Potential
• Improving European macroeconomic outlook
• Limited new hotel supply with continued growth in travel and tourism in key markets that NH Hotel Group operates
• Undergoing plans to dynamically uplift ADR through hotel renovations and CAPEX plans
• Continued cost and efficiency improvement plan
• Potential synergistic benefits that can be leveraged across Minor Hotels & NH Hotel Group
CAGR +5%
CAGR +11%
CAGR +69%
NH HOTEL GROUP’S FINANCIALS
Note: Recurring EBITDA before onerous reversal and capital gains from asset disposalsSource: NH Hotel Group’s 2017 results presentation and Bloomberg’s consensus as of 25 May 2018
10
HIGHLY ATTRACTIVE ASSETS
NH Hotel Group’s portfolio are grade A assets with cluster benefits, strategically located in extremely hard-to-replicate urban city locations in main European gateway cities.
AMSTERDAM (15 HOTELS)
MILAN (12 HOTELS)
BERLIN (12 HOTELS)
MADRID (29 HOTELS) BARCELONA (22 HOTELS)
BRUSSELS (10 HOTELS)
11
HIGHLY ATTRACTIVE ASSETS
NH Hotel Group’s portfolio are grade A assets with cluster benefits, strategically located in extremely hard-to-replicate urban city locations in main European gateway cities.
12
AGENDA:
TRANSACTION OVERVIEW
ACQUISITION RATIONALES
FINANCIAL COMPARISON
VALUE CREATION OPPORTUNITIES
13
FINANCIAL COMPARISON
* Source: Bloomberg’s consensus for both MINT and NH Hotel Group as of 4 June 2018
NH Hotel Group is expected to deliver robust financial performance and generate meaningful contribution to MINT in the comingyears.
0
25,000
50,000
75,000
0
5,000
10,000
15,000
0
2,000
4,000
6,000
8,000
MINT’s Shareholding Level
NH Hotel Group’s NPAT Contribution
to MINT
51.0% 28%
55.0% 31%
68.4% 38%
73.5% 41%
2018F REVENUE 2018F EBITDA
THB million
THB million
2018F NET PROFIT
THB million
% SHAREHOLDING SCENARIOS
14
AGENDA:
TRANSACTION OVERVIEW
ACQUISITION RATIONALES
FINANCIAL COMPARISON
VALUE CREATION OPPORTUNITIES
15
VALUE CREATION OPPORTUNITIES
Value creation opportunities are primarily focused on revenue expansion partnership rather than cost efficiencies.
Creation of Leading Asian-European Hospitality Platforms, with an asset-right portfolio of brands that are strong in their respective geographical footprint, and established presence across Asia, Europe, Australia, the Middle East, Africa and the Americas
Economies of scale, allowing more aggressive competition with the technology disruptors
Sales and distribution partnership, with opportunities on loyalty programs, sales & distribution expertise, improved account coverage and the leverage on overall database
Leverage on existing customer base of each company, expanding European demand to Asia, Middle East & Oceania, and vice-versa; leisure travelers to business, and vice-versa
Brand optimization opportunities across geographies, whether under NH Hotel brands or Minor Hotel brands in order to maximize revenues opportunities across the portfolios
Shared best practices across organizations, whether in terms of personnel, operations, brands, F&B expertise (Corbin & King, Benihana, the Coffee Club, Thai Express)
16
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
Minor Hotels NH Hotel Group Combined
Owned Joint-venture Managed MLR Leased
VALUE CREATION OPPORTUNITIES
Value creation opportunities are primarily focused on revenue expansion partnership rather than cost efficiencies.
Creation of Leading Asian-European Hospitality Platforms, with an asset-right portfolio of brands that are strong in their respective geographical footprint, and established presence across Asia, Europe, Australia, the Middle East, Africa and the Americas
35%20%
24%10%
3%
23%
23%
23%32%
8%57%
20,379
59,350
79,729
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
Minor Hotels NH Hotel Group Combined
Asia Oceania Africa & MENA Europe The Americas Others
42%
34%
75%
9%
33% 9%
18% 5%
11%
12%
59%
14%
20,379
59,350
79,729
9%
2%
10%
Hotel Platform by Ownership Hotel Platform by Location
No. of Rooms No. of Rooms
*As of Mar 2018
Accelerated Growth Opportunity
MINT’s luxury vacation club and ultra high-end residential development projects serve as part of the hospitality platform which are highly complementary to the hotel business
17
VALUE CREATION OPPORTUNITIES
Value creation opportunities are primarily focused on revenue expansion partnership rather than cost efficiencies.
Economies of scale, allowing more aggressive competition with the technology disruptors
Sales and distribution partnership, with opportunities on loyalty programs, sales & distribution expertise, improved account coverage and the leverage on overall database
Unrivaled hotel network with over 540 properties and 79,000 rooms combined
Ability to increase control over room rates
PR & marketing partnerships to drive
direct bookings
Opportunity to reduce OTAs commission with higher key count and
booking volumes
Potential cost synergies on investments in
technology and online platform
Loyalty Programs
Potential to leverage on the loyalty programs with
greater choice and value to customers
Sales & Distribution
Increase in brand awareness and sales coverage, covering
Europe, Asia Pacific, Oceania, Africa &
Americas
Customer Database
Opportunity to build on each other’s customer
database to drive higher occupancy and
cross-selling opportunities
18
Europe20%
Asia 60%
The Americas14%
Others 6%
Europe75%
Asia 9%
The Americas13%
Others 3%
Mexico + Argentina + Colombia
Europe75%
Asia 12%
The Americas10%
Others 3% Europe7% Asia 1%
The Americas87%
Others 5%
Europe71%
Asia 12%
The Americas13%
Others 4%
Europe82%
Asia 3%
The Americas10%
Others 15%
Europe52%Asia 42%
The Americas5%
Others 1%
Europe23%
Asia 71%
The Americas5%
Others 1%
VALUE CREATION OPPORTUNITIES
Value creation opportunities are primarily focused on revenue expansion partnership rather than cost efficiencies.
Leverage on existing customer base of each company, expanding European demand to Asia, Middle East & Oceania, and vice-versa; leisure travelers to business, and vice-versa
Thailand
Origin of International Tourist Arrivals
* Source: Ministry of Tourism and Sports, Thailand, Australian Bureau of Statistics, UAE Tourism Bureau, The Maldives’ Ministry of Tourism, Instituto Nacional de Estadistica, National Institute of Statistics, Italy, World Bank, UNWTO
(as of 2017)
Europe19%
Asia 50%
The Americas11%
Others 20%
(as of 2017)
Australia
(as of 2017)(as of 2016)
UAE Maldives
Creating a Global Customer
Base
Spain ItalyNetherlands
(as of 2017) (as of 2016) (as of 2016)(as of 2016)
Asian demand for Europe & South America
European & Latin American demand for Asia, Middle
East & Oceania
Germany
(as of 2016)
19
VALUE CREATION OPPORTUNITIES
Value creation opportunities are primarily focused on revenue expansion partnership rather than cost efficiencies.
Brand optimization opportunities across geographies, whether under NH Hotel brands or Minor Hotel brands in order to maximize revenues opportunities across the portfolios
Locations with Multiple NH Hotels
Locations with Multiple Minor Hotels
51
2512 9
6 5 5 4
Australia Thailand Portugal UAE Sri Lanka Mozambique Maldives Vietnam
2823
107 6
12 11 10 9 95 5
Madrid Barcelona Berlin Frankfurt Munich Amsterdam Milan Bogota Brussels BuenosAires
Vienna Mexico City
Germany Netherlands Italy Colombia Belgium Argentina Austria MexicoSpain
No. of Properties
No. of Properties
Total 130
*As of Mar 2018
58 36 51 15 13 15 7 15
20
VALUE CREATION OPPORTUNITIES
Value creation opportunities are primarily focused on revenue expansion partnership rather than cost efficiencies.
Shared best practices across organizations, whether in terms of personnel, operations, brands, F&B expertise (Corbin & King, Benihana, the Coffee Club, Thai Express)
Personnel Operations & Brands F&B Offerings
• Recruitment strategy and platforms
• Training programs
• Talent management and leadership development programs
• Performance management
• Result-driven culture
• Global job opportunities and career path
• Occupational health and safety standards
• Revenue & cost management
• Customer service standards
• Branding expertise
• Quality assurance
• Supply chain management
• Information technology
• Guest security and safety standards
• Compliance procedures
• Opportunity to cross sell restaurant concepts within the hotel network
• Marketing programs to boost capture rates
• Quality control
• Cost management
• Operational excellence
21
APPENDIX:
OVERVIEW OF NH HOTEL GROUP
22
Owned, 20%
Leased, 57%
Managed, 23%
OVERVIEW OF NH HOTEL GROUP
PORTFOLIO OVERVIEW
Italy, 18%
Central Europe,
25%Spain, 26%
Benelux, 22%
The Americas, 9%
2017 Revenue:
EUR 1,571m
No of Rooms: 59,350
NH Hotel Group is a leading European hotel operator with a diversified portfolio in the mid- to upscale segment across 30 countries in Europe, Americas and Africa.
Revenue Breakdown Ownership Breakdown*
Brands Brand PositioningNo. of
Hotels*Hotel
Rooms*
Midscale to upscale, urban hotels
289 41,702
Upper upscale, premium hotels located in capital cities
75 11,779
Upper upscale, unconventional “design” hotels 3 828
Upscale, holiday hotels 8 2,330
Total 382 59,350
6th largest hotel chain in Europe
Listed on the Madrid Stock Exchange with a market
capitalization of EUR 2.2 billion*
Spain-based leading urban hotel operator with 382 hotels
and 59,350 keys in 30 countries
Key operating markets include Spain, Germany, Italy and
Benelux
* As of Mar 2018
23
Europe
Andorra 1 -
Austria 7 -
Belgium 13 -
Czech Republic 3 -
France 4 -
Germany 58 -
Hungary 1 -
Italy 51 -
Luxemburg 1 -
Poland 1 -
Portugal 3 12
Romania 2 -
Slovakia 1 -
Spain 130 -
Switzerland 4 -
The Netherlands 36 -
United Kingdom 1 1
Total 317 13
The Americas
Argentina 15 -
Brazil 1 2
Chile 5 -
Colombia 15 -
Cuba 2 -
Ecuador 1 -
Haití 1 -
Mexico 15 -
RepúblicaDominicana
1 -
Uruguay 1 -
USA 1 -
Venezuela 4 -
Total 62 2
Africa & Middle East
Botswana - 1
Kenya - 11
Lesotho - 2
Maldives - 5
Mozambique - 5
Namibia - 1
Oman - 2
Qatar - 2
Seychelles - 1
South Africa 1 -
Tanzania - 6
UAE - 9
Zambia - 2
Total 1 47
Asia & Oceania
Australia - 51
Cambodia - 1
China - 3
India - 1
Indonesia - 2
Laos - 1
Malaysia - 1
New Zealand - 4
Sri Lanka - 6
Thailand - 25
Vietnam - 4
Total 0 99
*As of June 2018
OVERVIEW OF HOTEL PORTFOLIO
Minor Hotels has a strong presence across Asia and Africa, while NH Hotel Group is primarily focused in Europe and the Americas.The two companies offer an enlarged platform of over 540 hotels across the globe.