Skift Take

There's a bright side to HNA's Chinese government-induced sale of its stake in Spain's NH Hotels: The disposal could turn into a downright bidding war.

HNA Group Co.’s stake in Spanish hospitality provider NH Hotel Group SA has attracted interest from potential bidders including Elliott Management Corp. and Apollo Global Management LLC, people with knowledge of the matter said.

The Chinese conglomerate’s nearly 30 percent holding in NH Hotel has also drawn interest from other funds and companies in the industry, according to the people, who asked not to be identified because the information is private. Bids are due as soon as this week, though the deadline could still be pushed back, the people said. HNA’s stake is valued at about 657 million euros ($758 million) based on Tuesday’s close, data compiled by Bloomberg show.

HNA, which is selling assets to cut debt after a $40 billion-plus acquisition spree, said in January it was working with advisers including JPMorgan Chase & Co. to gauge interest in the stake. That same month, NH Hotel rejected a takeover offer from Spanish rival Grupo Barcelo, which was seeking to create a “national champion” that can better compete with the world’s biggest hotel groups.

Elliott, the fund run by billionaire Paul Singer, has been active lately in Europe. It confirmed last week it has built a “significant” stake in steel and engineering company Thyssenkrupp AG, saying it wants to talk to the board about how to improve operations. Elliott has also taken a stake in Telecom Italia SpA and is pushing for changes including improved corporate governance and asset sales to cut debt.

Debt Load

There’s no certainty the suitors will proceed with offers for HNA’s stake, and the Chinese company could ultimately decide to keep its holding, the people said. Representatives for Apollo, HNA and Elliott declined to comment.

NH Hotel, which operates nearly 400 hotels in 30 markets, was losing money when HNA invested in 2013. After a debt refinancing, it returned to profit in 2015 and in the first quarter this year reported net income of 21.7 million euros.

Thailand’s Minor International Pcl has separately been building a stake in NH Hotel. Earlier this month, it bought shares in the Spanish company held by Oceanwood Group, NH Hotel’s second-largest shareholder. Minor has since boosted its stake to 10.5 percent, according to a filing this week.

HNA is also continuing to whittle down its real estate holdings as it seeks to reduce its massive debt load. The company sold a San Francisco office tower at 123 Mission St. for about $300 million to Northwood Investors LLC, reaping a small profit on the property it bought in August 2016, people with knowledge of the matter said.

The Chinese group has also sold stakes in Hilton Worldwide Holdings Inc. as well as the hotel company’s spinoffs, Park Hotels & Resorts Inc. and Hilton Grand Vacations Inc.

–With assistance from Prudence Ho.

©2018 Bloomberg L.P.

This article was written by Vinicy Chan, Sarah Syed and Manuel Baigorri from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to [email protected].


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Tags: hna, mergers and acquisitions, nh hotels

Photo credit: The ranks are growing of companies that want to buy HNA's stake in Spain's NH Hotels. One of its properties is shown above. Bloomberg