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Luxury UK hotel chains, Malmaison and Hotel du Vin, are to be sold by owner Marylebone Warwick Balfour Group (MWB) for ”700m ($1.4bn) plus.
In a statement released today (16 July), MWB stressed that its decision was very much evolutionary: ”At this point in time, any discussions are at a very early stage, no negotiations have been commenced or contracts exchanged and there can be no certainty that any such transaction will proceed.”
MWB intended to sell the hotel property assets this year but for the time being retain the operating business, in order to sell it separately by the end of 2008. A proposed ”495m deal between Vector Hospitality and MWB for the properties, failed last month and these were subsequently placed on the open market on 2 July.
There is a total of 19 hotels involved in the transaction, ten of which are Malmaison and the remaining nine Hotel du Vin. In addition, there are a further seven properties in the pipeline due to open between this year and next.
A source close to the company told ABTN that while it is ”unusual” for MWB to change its mind and decide to offer the hotel chains as complete companies, ”we were blown away with requests to buy the whole company ” 80% of those who contacted us or who we approached said they”d prefer it.”
He also confirmed that MWB is still considering a sale of the property assets alone, as selling separately usually results in a better deal. ”However, the market is changing and we could get more selling the whole company ” we would consider an offer of ”500m for the assets and ”700m plus for the whole. At the moment it”s looking more like ”740-750m, but obviously we”re hoping for more than that.”
Much controversy surrounded the possible asset sale to Vector, as CEO of MWB, Richard Balfour-Lynn, is also a director at Vector. Mercury Real Estate Advisors, MWB”s largest shareholder, wrote MWB”s board a letter calling the transaction ”unsettling,” adding: ”The agreement with Vector was fraught with conflicts of interest.”
In the same letter, Mercury also hinted that the separate sale of the properties and operating business was not to its liking: ”There is no evidence that such a bespoke operating company / property company structure, designed solely for the benefit of Balfour-Lynn, represented or remains the best value available in the market for shareholders.”