The HNA Group will become a strategic shareholder of NH Hoteles with a 20% stake by subscribing to a capital increase amounting to €431.6M at a price of €7 per share. The operation will entitle HNA to have two seats on the Board of Directors of the Company.Both groups contemplate the creation of a hotel management company in China that will allow NH Hoteles to enter one of the largest markets in the world with the help of an important local partner in the Chinese tourism sector. The HNA Group, 6th company in the ranking of the "500 best private companies in China" according to ACFIC, is composed of a group of companies operating in the air transport, logistics, financial services, tourism, real estate activity (including hotels), mass consumption and airport management. In 2010, the Group achieved revenues of €7,000M, has assets of approximately €40,000M and more than 80,000 employees.
The Board of Directors of NH Hoteles, in a meeting held yesterday, has agreed to give the HNA Group entry into the company's shareholding. Grupo Chino will acquire 20% of NH Hoteles and will have two members on the Company's Board of Directors.
The transaction, for a total amount of €431.6M, will be carried out via capital increase excluding the pre-emptive subscription right. The subscription will take place at a price of €7 per share, which is a significant premium over the current market price and the average price of the last quarter. In this way, HNA will become the second reference shareholder of the Spanish company.
The agreement is subject to the approval of the Chinese regulatory authorities and provides for the effective incorporation of two HNA Group directors to the Board of NH Hoteles.
NH Hoteles enters the league of the greats of the international hotel industry
The HNA Group and NH Hoteles will also contemplate the creation of a joint venture for the development of the hotel business in China in the four-star segment, where NH Hoteles concentrates its core business. The operation is complemented by NH Hoteles' current strategy of growing under low-intensive investment formulas in fixed assets, such as the management of hotels owned by third parties. In addition, it will facilitate the Company's entry into one of the fastest growing markets in the world with a local partner of reference in the Chinese market.
The agreement contemplates the possible contribution to the new company of the management of some of the current HNA hotels that adapt to the characteristic brand image and segment of NH Hoteles. The joint venture will therefore benefit from NH Hoteles' management, loyalty and booking systems, use its brand in China and at the same time rely on the HNA Group's local knowledge and access capacity to identify the best hotel locations, local management teams and general logistics of the group in the Chinese market.
Mariano Pérez Claver, President of NH Hoteles, said: "I want to highlight the great industrial value of this agreement while, in addition to strengthening the group's balance sheet, it represents an important strategic step for NH Hoteles. The alliance that we now agree means that our company will have the opportunity to establish itself in a market with enormous potential such as China and where there is an obvious gap of opportunity for the NH model, all with the help of a large, dynamic, powerful and prestigious business group that happens to become, additionally, it is a reference partner of NH, thus aligning the interests of both companies in all areas".
Adam Tan, Executive Director of the HNA Group, said: "The HNA Group is honoured to be part of the shareholding of NH Hoteles in order to support the management team in its continuous effort to turn the Group into the largest company worldwide, in what will be the largest hotel market in the world."
The entry of the Spanish hotel chain in China will allow, in due course, to increase its turnover, diversify its income to a greater extent and take advantage of the excellent opportunity of taking a relevant position in the 4-star hotel segment, as the demand for business travel in the country grows. This demand is driven by higher disposable income and the government's policies to promote domestic consumption in China, which have led to a significant process of urban concentration in the country in recent years.
More than 60 cities in China today have a population of more than one million inhabitants compared to Europe which has 35. It should be noted that according to the World Tourism Organization, China will be the world's first tourist recipient in 2020.
In addition, within the framework of the operation, the negotiation of a commercial agreement between both companies is contemplated with the aim of taking advantage of the potential synergies given their complementarity. The agreement would involve cross-selling opportunities between the two companies through the establishment of a commercial relationship between NH and other business areas of the HNA Group, such as airlines and tour operators. The operation would include a business address agreement to NH hotels, which would thus become the hotel company prescribed for travelers of the HNA Group airlines. This alliance will encourage a greater reception of customers from the Asian continent to NH Hoteles and therefore a greater diversification of the type of users of the chain by issuing country.
ABOUT SR
HNA Group (www.hnagroup.com) is a large industrial group based in Haikou, China. The company has a significant presence in the sectors of airlines, logistics, financial services, tourism, real estate activity (including hotels), mass consumption and airport management. In 2010, the Group achieved revenues of €7,000M, has assets of approximately €40,000M and more than 80,000 employees.
The Group owns China's fourth largest airline group, Hainan Airlines, listed on the Shanghai Stock Exchange; Xi'an Minsheng Group, department stores listed on the Shenzhen Stock Exchange; Haikou Meilan International Airport Company, a company that owns and operates airports, listed on the Hong Kong Stock Exchange; Grand China Logistics, which has a fleet of 90 merchant ships, financial leasing companies in sectors such as infrastructure, aircraft and logistics; and a company that owns and operates more than 50 hotels in China and 3 hotels in Europe.
ABOUT NH HOTELES
NH Hoteles (www.nh-hotels.com) ranks third in the European ranking of business hotels. The Company operates 400 hotels with around 60,000 rooms in 25 countries with an outstanding leadership position in Europe (36% of the room portfolio in Spain, 18% in Germany, 14% in Italy and 11% in the Netherlands among others), in addition to having a presence in America and Africa. It has, among others, 5 hotels in Rome, 41 hotels in Madrid and 13 hotels in Amsterdam. NH Hoteles currently has 22 new hotel projects under construction, which will involve 3,000 new rooms.
The Company, which closed the first quarter of this year with an increase in revenues of 12% and 57% in EBITDA, is in a process of growth and improvement of its profitability favored by the increase in occupancy levels and prices that have been observed in the sector as well as by the programs launched throughout this first quarter aimed at improving the commercial and operational efficiency, the enhancement of non-face-to-face distribution channels and hotel management on behalf of third parties.
FOR MORE INFORMATION:Communication Department of NH Hotelestel: +34914519762Tel: +34 91451 97 18 (switchboard)Email: [email protected]
RESERVATION CENTERTel: 902 115 116 (From Spain)Tel: +800 0115 0116 (From AUS, BE, FRA, ALE, IRL, HOL, ITA, PT, SU, RU)Tel: +34 91 398 44 00 (From other countries)Web: http://www.nh-hotels.com
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