European investor steps back from €110m Dalata shares deal

Transaction would have meant up to 14% of State’s largest hotels business changing hands

Dalata – which is the biggest hotel operator in the Republic – recently engaged JP Morgan to act as dealer-manager. File photograph: The Irish Times

Dalata – which is the biggest hotel operator in the Republic – recently engaged JP Morgan to act as dealer-manager. File photograph: The Irish Times

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A European corporate has decided not to proceed with the purchase of up to 14 per cent of the Dalata Hotel Group through the acquisition of €110 million worth of ordinary shares in the group, which is the biggest hotel operator in the Republic.

In a note to investors via the London Stock Exchange on Thursday, JP Morgan said it was recently engaged by the European corporate to act as dealer-manager to intermediate the purchase of the financial investment.

It said the European corporate in question has multiple minority holdings and sought to purchase the shares at a price between €3.50-€3.75. The shares closed on €3.37 after Thursday trading in Dublin.

“The purchaser engaged with certain shareholders of the company to solicit interest regarding the potential purchase, however it has decided not to proceed with the purchase at this time,” JP Morgan said.

‘Unwilling to sell’

In a note on Friday, Goodbody analyst Paul Ruddy said that had the buyer been successful it would have purchased about 29-31 million shares in Dalata, or 13-14 per cent.

“The indicated buying range would represent a 1-8 per cent premium to the year to date average closing price and a 12-20 per cent premium to the year to date lows,” he said.

“Although a transaction did not take place, we believe this is supportive of valuation given there was new buyer interest and also because it would appear that sufficient existing shareholders were unwilling to sell at those levels.

“From a wider UK and Ireland leisure perspective, buyer interest appears to be ramping up with Platinum Equity Partners launching an unsuccessful £665 million takeover bid for Marston’s and former Greene King CEO Rooney Anand launching a fund to purchase UK pub assets.

“We recently updated Dalata forecasts to reflect the continued Covid related restrictions, and remain positive on it as a recovery play.”

Chief executive Pat McCann has said the group would be “very geared up” to operate as quarantine facilities for arrivals into the State should the Government proceed on that policy. He noted there would be 850 rooms between the two Clayton and Maldron hotels near Dublin Airport, he said.

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