Bahrain Tourism Company's Merger offer opens

05/04/2016 07:49 AST

Offers to Bahrain Tourism Company (BTC) shareholders which would lead to the company's merger either with Gulf Hotels Group (GHG) or Al Jazeera Tourism Company (AJTC) opened yesterday.

In a statement to Bahrain Bourse (BHB), BTC said GHG and AJTC have made separate offers to acquire all 72 million of its shares.

Both BTC and GHG are listed on BHB while AJTC is a closed Bahraini joint stock company. BTC, whose major undertakings are the Crowne Plaza Hotel and the Bahrain Conference Centre, had in the past signed separate memoranda of understanding with GHG and AJTC to evaluate the feasibility of a merger or acquisition by one of them.

Yesterday's announcement said the GHG is offering one share for 2.261 shares held in BTC, whereas AJTC is offering 230 fils in cash for each BTC share.

Based on GHG's share price of BD0.780 (780 fils) at close of trade yesterday and BTC's share price of 228 fils at close of trade on March 30, when trading in the company's shares was suspended, the GHG offer means that BTC shareholders get 265 fils more in terms of value of their investment.

The AJTC offer of 230 fils per share is two fils more than BTC's closing share price and the former said it proposes to finance the acquisition equally through equity and bank credit facilities.

GHG's offer is contingent on at least 48,240,000 BTC shares representing 67pc of share capital being sold to it whereas AJTC's offer requires at least 36,720,000 BTC shares, representing 51pc of share capital being sold to it.

The offers will close on April 21 and the results will be announced by April 24. In the event that either of the offers is declared unconditional, the offer will remain open for acceptance by shareholders for a further 15 days from the date of such declaration, said BTC.

The issue of new shares in GHG or cash settlement by AJTC will be done by May 11. According to information available on the BHB website, major shareholders holding more than 5pc of BTC are Social Insurance Organisation with 51.5pc, Yousif Abdulla Amin with 7.5pc and Farouk Almoayyed with 5.35pc.

GHG's major shareholders are Mumtalakat owning 30.14pc, Family Investment Company owning 12.74pc, Y K Almoayyed & Sons owning 7.24pc and the Social Insurance Organisation having 5.42pc.

Major shareholders holding more than 5pc of AJTC are Abdulaziz Qasim M Kanoo with 18.87pc, Mumtalakat with 19.65pc and Watad Holding with 19.65pc.

The announcement quoted the GHG as saying that it expects the consolidation to result in asset, revenue, cost and other operational synergies, providing shareholders with enhanced returns.

While it intends to maintain BTC's commercial registration, it may delist BTC and operate it as a subsidiary. GHG also intends to rebrand the Crowne Plaza Hotel with the Gulf Hotel brand under the active management of GHG.

The company said the current state of the Crowne Plaza Hotel building will also be assessed for potential refurbishment.

GHG intends to continue with BTC's 33.33pc stake in African & Eastern (Bahrain) and will assess BTC's holdings in listed and unlisted equities as well as investments in certain managed funds in order to determine the best solution for each holding on a case-by-case basis.

Upon acquisition of BTC, GHG said it will combine such holdings with its investment portfolio where a benefit exists to combine such holdings.

AJTC said the acquisition would create a larger hotel group resulting in economies of scale including areas such as joint purchasing arrangements.

It expects returns to shareholders will increase through tight control over operating costs and general administration costs.

Following the acquisition, AJTC intends to delist BTC from BHB, and its future plans include continuing the core business, increasing the turnover through

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