Takeover battle looms at Ireland's largest hotel operator
The offer of €6.05 per share by Pandox and Eiendomsspar represents a premium of just over 27pc on the €4.76 closing price of March 5, the last trading day before Dalata announced it was launching a strategic review, with one option being a sale.
It is a 14pc premium to the three-month average price of €5.32 per share.
Russ Mould, an analyst with AJ Bell, said: 'The big unknown is whether their proposed bid is enough to seal the deal and whether another party makes a higher offer. The consortium's 27.1pc bid premium is below the 36pc average on UK-listed takeovers so far this year. That leaves scope for someone else to come along and offer slightly more.'
A number of American investment firms have already submitted bids for Dalata, according to reports by Green Street, a property news website. They are said to include Bain, Apollo and Starwood, which already owns 2.7pc of Dalata through an affiliate.
The board of Dalata has hired Rothschild, an investment bank, to carry out the strategic review. The consortium said it has not participated in that process and formulated its proposal independently.
Dalata is listed in Dublin and London, and its share price was boosted by the announcement of the bid. It was up over 8pc in London, to £5.10, and by over 5pc on Euronext in Dublin, reaching €6.07 at lunchtime.
Eiendomsspar, one of the largest property owners in Norway, with its portfolio including 11 hotels, already has an 8.8pc stake in Dalata. It controls 36pc of the shares in Pandox, a Swedish firm that owns 163 hotels across 11 countries in Europe, with about 36,000 rooms.
Based in Stockholm, Pandox develops and then leases hotels to operators under long-term deals. Its hotels in Ireland operate under the Leonardo brand.
'As established hotel investors with deep knowledge of the European hotel sector and experience in successfully executing similar transactions in the UK and Ireland, the consortium is well positioned to support Dalata's business and long-term growth ambitions,' it said in an announcement to the stock exchange.
'The consortium is currently negotiating with a reputable European hotel operator to enter into a framework agreement for the operation of the Dalata hotels if the consortium acquires Dalata. This operator shares the consortium's commitment to long-term profitability and sustainable growth.'
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Under takeover rules, the consortium has until July 15 to either announce a binding intention to make a bid for Dalata, or to pull out.
Dalata, whose chief executive is Dermot Crowley and which was established in 2007, has a portfolio of 55 hotels in Ireland and Britain, both owned and leased, operating under the Maldron and Clayton brands. Its portfolio has grown by a third over the last four years, and it has declared an aim of having 21,000 rooms by 2030.
In April, the company said it had done a deal with a Spanish real estate firm to lease to develop a Clayton hotel in Madrid.
The share price was bumping along around the €4 mark for much of last year, leading its board to conclude that this did not reflect the asset base, performance, cash generation and growth prospects of the business.
After the announcement of the strategic review, analysts at Jeffries said the external valuation on the estate of hotels was €1.64bn but adding in earnings from its leased estate, and its pipeline, the value could jump to 'at least €2bn'.
Apart from Eiendomsppar, other prominent shareholders in Dalata include the Saudi conglomerate Zahid Group and the British hedge fund Helikon Investments, which has a stake of over 17pc.
Barry English, founder of Winthrop Technologies, has built up a share of over 1pc in Dalata, but this is thought to be a value play rather than a signal of interest in purchasing, although he already owns Mount Juliet, the Johnstown Estate Hotel and Trim Castle Hotel.
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