Shares in Minor International surged this week after the Thai hotel and food firm said it was planning to use debt to finance a bid for NH Hotels, a deal valuing the Spanish chain at up to €2.5 billion.
The proposed purchase would be Thailand's largest overseas hospitality deal and would give Minor hotels with scale and presence in "hard to get" cities across Spain, Benelux, Central Europe and Italy, the company said.
"It's a launching pad for the rest of the group, in terms of our F&B (food and beverage) and hotel brands and growing our business," Minor Chief Operating Officer Dillip Rajakarier told Reuters.
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Owned by US-born billionaire William Heinecke, Minor operates 158 hotels across Asia, the Middle East, Australia and Africa. The NH acquisition would increase its portfolio to 540 hotels, Rajakarier said.
He said the company, which operates hotels in 32 countries and food and beverage brands such as the Benihana sushi and steakhouse chain, was still looking for acquisitions worth up to $300 million in locations such as London, Prague and Rome.
Investors were relieved that Minor was not eyeing an equity issue to finance the deal, traders said.
Minor said it had agreed to pay China's HNA, NH's biggest shareholder, €622 million for a 26.5% stake.
The conversion of some bonds to shares will take Minor's stake over the 30% ownership threshold beyond which Spanish law requires a full takeover.
NH's shares were down 3% on the news of Minor's offer of €6.40 per share, below an earlier offer from Spanish Grupo Barcelo that valued shares at €7.08.
NH rejected Barcelo's offer in January because it was an asset exchange and not cash.
A counter bid from Barcelo looked "tougher" because Minor would control 38% of NH, Kepler Cheuvreux said in a research note.
Minor is targeting 51% to 55% ownership of NH and wants the Spanish firm to remain publicly listed and liquid, Rajakarier said.
"Our intention is not to issue new capital," he said, adding if Minor went beyond 55%, "we will find new investors and we got a few who are willing to invest with us".
Minor began an investment drive in 2016 when it acquired Portuguese hotel brand Tivoli for €294 million.
Heinecke, who became a Thai citizen in 1991, made his fortune bringing Western-style quick-service restaurants like Pizza Hut and Dairy Queen to the Thai market.
Minor is the latest Thai hospitality firm to snap up hotels abroad. In February, U City bought Vienna House for €330 million and Singha Estate purchased Hawaii-based Outrigger for $250 million.
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