Now we have news of the next merger — Carlson hotels are being taken over by HNA Tourism Group, a Chinese company, which also owns a big stake in Hainan Airlines.
This is different than the Chinese insurance company Anbang, which was bidding for Starwood recently. Carlson hotels include Radisson, Park Plaza, Country Inn & Suites, and more.
They’re a brand which has historically done well in the limited service sector, but has struggled to expand beyond that. While Radisson Blu is an upscale brand, it hasn’t been expanding at an especially rapid pace.
Here’s what leaders of the two companies have to say about the takeover:
“Carlson Hotels own a powerful set of global brands and this historic agreement provides tremendous opportunities for growth,” said David P. Berg, Carlson Hospitality Group chief executive officer. “We look forward to working within HNA Tourism Group, a greatly respected global enterprise, in what will be an exciting new chapter in the history of Carlson Hotels. As part of HNA Tourism Group, Carlson Hotels will have an opportunity to advance our commitment to providing guests with hospitality world-wide,” added Mr. Berg.
“Since my grandfather, Curt Carlson, founded our company in 1938, our family has run businesses that create opportunity for people and positive change in the world,” said Diana Nelson, Carlson Board chair. “Hospitality is in our hearts, which made this a difficult decision. We strongly believe that selling our hotel business to HNA Tourism Group, a company that fully recognizes its value and heritage, is the best way for us to position it for success and to be true to my grandfather’s legacy in the long term.”
“We have great respect for the Carlson family and a deep appreciation for its history and special culture,” said Bai Haibo, HNA Tourism Group’s Board Member and HNA Hospitality Group’s Chairman and CEO. “Carlson Hotels’ global success and strong, sustainable growth potential is a testament to their world-class brands, continuous innovation, excellent management, and unique employee-focused culture, all of which we will build upon as part of this combination to establish our presence in the U.S. market and expand our footprint in hospitality internationally. We look forward to working together with their management team, employees, franchisee partners, suppliers and customers to accelerate growth by investing substantially in the business.”
HNA Tourism Group is acquiring 51.3% of Rezidor Hotel Group, and then 48.7% will be available under a mandatory public tender offer, per Swedish takeover rules:
Under terms of the Agreement, which were unanimously approved by the Carlson Board of Directors, HNA Tourism Group will acquire all of Carlson Hotels, including its approximately 51.3 percent majority stake in Rezidor Hotel Group AB (publ) (“Rezidor”), Carlson Hotel’s master licensee based in Brussels, with hotels in Europe, the Middle East and Africa. Since the closing of the Transaction will result in an indirect change of control in Rezidor, HNA Tourism Group would, under Swedish takeover rules, be obliged to launch a mandatory public tender offer for the remaining approximately 48.7 percent of Rezidor, within four weeks after the closing of the Transaction if the ownership in Rezidor is not sold down below 30 percent. Hence, HNA Tourism Group may, during these four weeks following closing of the Transaction, decide whether to launch a mandatory public tender offer for the remaining shares in Rezidor or sell down its ownership in Rezidor below 30 percent. If HNA Tourism Group decides to launch a mandatory public tender offer, according to Swedish takeover rules and as per a ruling from the Swedish Securities Council (“SSC”)1, the minimum price in such mandatory tender offer would be the 20-trading day volume weighted average price (VWAP) immediately before the announcement of the signing of the Agreement to acquire Carlson Hotels dated April 27, 2016.
This is a different takeover situation to the other ones we’ve recently seen. The other hotel mergers the past couple of years have involved major hotel chains combining. Then you had companies like Anbang bidding on Starwood, which weren’t actually involved in the hospitality industry, but rather were just looking to diversify their assets abroad.
What we’re seeing here is a hybrid. HNA Tourism Group is, as the name suggests, a tourism group. The extent of their involvement in the hotel industry is that they own some boutique hotels, so it’ll be interesting to see whether they plan on integrating them into the Carlson brand. Given that it’s a Chinese company, it’s certainly possible that they’re just trying to diversify their assets abroad, and will let Carlson continue to operate independently.
While in general consolidation isn’t good for consumers, this situation is a bit different, because it doesn’t look like we’re actually seeing major brands combine. Instead a Chinese company is looking to diversify their assets internationally, and Carlson was an attractive target, given their sustainable and reasonable growth over the past many years.
I’m curious if HNA will be involved in the day-to-day operation of the hotel group, or if they’ll be a silent owner.
What do you make of HNA Tourism Group taking over Carlson?
(Tip of the hat to @GCADave)