International Hotel Investments plc - Conditional Agreement for IHI to acquire Island Hotels Group

Friday, January 16th, 2015

On 16 January, International Hotel Investments plc (IHI) and Island Hotels Group Holdings plc (IHG) announced that IHG’s Board of Directors were informed that a significant majority of shareholders of IHG have entered into a conditional agreement with a view of merging the assets and operations of IHG within those of IHI through an acquisition of IHG by IHI. The agreement is subject to the satisfaction of various conditions including: compliance with regulatory requirements, obtaining shareholders’ approval and IHI completing a due diligence exercise on IHG.

Based on publicly available information, IHI have indicated a tentative net equity value for IHG of €50 million equivalent to €1.367 per share of IHG. If the transaction is successful, IHI would proceed with a voluntary offer with the aim of acquiring all the shares of IHG for a mixed consideration of cash and shares. IHI have indicated that they would tentatively be offering €1 in cash, split into two tranches with €0.55 payable on completion of the transaction and the second tranche of €0.45 payable within twelve months of completion of the transaction, and a further 0.246 IHI shares for each IHG share through the issuance of 9 million IHI shares to IHG shareholders.

In the respective announcements both companies expressed a positive view on the proposed deal.

IHG explained that the acquisition of its assets, management expertise and businesses by IHI represent an opportunity for IHG shareholders to crystallise their investment at a fair price whilst continuing to form part of the future growth and development of IHI.

On its part, IHI stated that the acquisition of IHG will generate significant synergies, gains and benefits to IHI’s objectives. These include operational synergies across the board and additional development opportunities that will arise as a result of an amalgamation of IHG’s hotel operation in St. George’s Bay with that of IHI’s own neighbouring hotels. Furthermore, both companies are also actively involved in the catering sector, in Malta and overseas, and the acquisition of IHG’s assets, experience and contracts in this area will create efficiencies in existing operations all round and provide a stronger platform for international growth.

In conclusion, IHG noted that it will make further announcements confirming the terms and conditions upon which IHI shall proceed to make a voluntary offer for all the shares in IHG in the event that all conditions are ultimately satisfied. Furthermore, IHG emphasised that its management remains unchanged and will continue to operate all IHG businesses as normal.

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