Investors check in to the Hilton
CASH-rich Chinese investors are expected to hoover up billions of pounds worth of hotel assets this year.
Sales of US hotels to the Chinese have soared since 2009 as they mop up trophy assets in primary destinations. One of the most recent transactions was China’s Anbang Insurance Group’s purchase last October of the prestigious Waldorf Astoria in New York for £1.31bn, which set a new record for a single hotel deal in the US.
It followed a loosening of controls on outbound investment by China’s Ministry of Commerce. Deals above £67.4m now no longer require its approval.
Hilton Worldwide was the seller of the Waldorf Astoria and its shares have been in strong demand of late on the Street of Dreams, amid hot gossip that private equity group Blackstone had been approached by a Chinese consortium, including Shanghaibased JinJiang International, to name a price for its majority stake in the famous hotel chain.
Blackstone took Hilton private in 2007 at the height of the buy- out boom for £18bn and refloated the group in December 2013, raising £1.58bn.
Hilton’s shares change hands around the $29 (£19.55) level and have risen 5pc over the past month and 19pc over the past quarter as bid speculation intensified.
Whispers have suggested Blackstone has been offered $45 (£30.34) a share for its controlling stake, but that it wants a lot more before agreeing to a sale.
Shares of Intercontinental Hotels jumped 57p to 2683p on talk that the Crowne Plaza-to-Holiday Inn chain will benefit from a bumper takeover deal for Hilton Worldwide. Intercontinental, which opened its first Holiday Inn hotel in China in 1984 and which continues to lead the hospitality industry there, could be asked to manage many Hilton hotels post any Chinese bid.
Chinese visitors are expected to drive the global tourism industry over the next ten years. More than 98m travelled abroad in 2013, up 18pc on the previous year and within five years that figure could quadruple.
Dealers returned from the long Easter holiday weekend in bullish mood. As Greece said it would honour its €450m payment to the IMF tomorrow and the oil price overnight enjoyed its biggest daily rise for two months, the Footsie raced away to close 128.31 points higher at 6961.77, while the FTSE 250 soared 252.65 points to 17521.48.
But Wall Street struggled to hold onto early gains, despite excitement over FedEx’s £3bn-plus bid for the Dutch package delivery group TNT Express.
Shares in drug developer Biomarin traded 4pc up in early dealings amid speculation that Viagra maker Pfizer was ready to trump any possible offer from Shire, 225p better at 5385p. The latter found support after saying it had agreed with the US Food and Drug Administration the steps it would take for clearance to submit a candidate drug to treat hyperactivity in adults.
The 5pc bounce in the oil price helped BG Group gush 57.5p to 910.4p, Royal Dutch Shell 82p to 2208.5p, Premier Oil 17.3p to 150.8p, SOCO International 12.9p to 172.6p and Cairn Energy 10.6p to 170p.
Mining giant Rio Tinto advanced 111p to 2862p on hopes that old foe Glencore, 9.9p dearer at 290.65p, will return with a new offer soon now its handcuffs have been removed.
Rio Tinto rejected an approach last October, triggering a six-month period under UK Takeover Panel rules during which Glencore was barred from making another offer.
Elsewhere, British Airways owner International Consolidated Airlines’ wings were clipped by a JP Morgan Cazenove downgrade to neutral from overweight. The shares were sold down to 574.5p before they closed 7p off at 591.5p.
A reassuring trading update with business in line with expectations and no change to management’s guidance for the year to end-March 2015 helped Flybe edge forward 1.25p to 57.75p. Liberum Capital remains a buyer and has a target price of 140p. Wizz Air flew 55p higher to 1480p on a Citigroup recommendation and target price of 1630p. February’s IPO price was 1150p.
Gresham Computing put on 3p to 89p after announcing a contract with a leading insurance brokers for its flagship product Clareti Transaction Control.
Premier African Minerals rose 9pc to 1.547p after its environmental impact assessment was approved by the Environmental Management Agency of Zimbabwe and permission has been granted to operate the company’s tungsten project there.
Buyers chased Amara Mining, owner of the largest gold resource in West Africa, 1.25p higher to 15.38p following annual results. ÷ PANMURE Gordon is a big fan of Nostrum Oil & Gas, 22p up at 586p. Analyst Colin Smith’s target price is £8. It is one of only two non-state controlled $1bn-plus market cap pure play E&P stocks in the investable Russia/CIS space. Its principal asset is a giant field in Kazakhstan where production is set to more than double by 2018 to 100,000 barrels of oil each day, generating around half a billion dollars a year in free cash flow. Read the market latest updated
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