In a move that has been rumored for more than a month, Shanghai’s Jin Jiang International Holdings has made a deal with a neighbor, of sorts, for Radisson Hospitality AB: It’s buying a 51.5% stake in the company from Haikou, China-based HNA Group, along with up to an additional 18.5% stake from HNA’s Swedish unit.
The deal values the company at US$671 million ($3.89 per share), according to HVS Europe; it’s intended to close at year-end.
The sale is part of HNA’s attempt to divest its international holdings amid debt and political pressure exerted by the Chinese government; earlier this year, it sold its US$6.5 billion stake in Hilton, part of US$17.7 billion in holdings it has shed since late last year, and it also sold a 25% stake in Spain’s NH Hotel Group to Thailand’s Minor International.
“I was not surprised by the transaction,” Eric Levy, managing director of hospitality investor and adviser Tourism Solutions International Pte Ltd, told HOTELS. “Jin Jiang has for years sought to spread its wings outside of China, recognizing the synergy it could bring to its existing hotels and importantly to benefit the ex-China hotels via its deep and strong network in China. They (and their affiliates) have continued to be active in acquisitions (Sarovar in India) and I know they are looking for opportunities in Asia as well to jumpstart its organic growth.”
In an emailed statement, Radisson Hospitality CEO John Kidd said: “HNA has been extremely supportive of our business along with the creation and execution of our five-year strategic plan. Our efforts to transform the company to-date have helped make Radisson Hotel Group an extremely attractive acquisition target. We see an immense opportunity with Jin Jiang International to join one of the largest hotel companies in the world.” Radisson declined to comment further.
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To his knowledge, Levy said, Jin Jiang is one of the few Chinese companies in the past year proactively seeking non-organic growth in the management platform space. “If combined, their ‘international portfolio,’ with all the Radisson brands, Golden Tulip, Kyriad and Campanile, would have synergies in terms of size, tiering and geographic distribution,” he said. “I have no question that should the transaction complete, at the very least such considerations will be seriously considered…for good reason.”
Government-controlled Jin Jiang has a 12% stake in France’s AccorHotels. How will that stake be impacted? Knowing Accor CEO Sebastien Bazin, Levy said, “he will spend time at least considering what can be done (as will the Jin Jiang executives) to leverage a stronger relationship. Jin Jiang owns a lot of its properties, of which is an anomaly in today’s asset-light (hotel management contract) model, and makes certain options more challenging. Industry observers will debate this one over many a cold one.”
According to Robert Hecker, managing director of Asia Pacific for Horwath HTL: “I would say that Jin Jiang wants to be global, not just as a minority investor in Accor, which they’d be unlikely to be able to buy more/control. The Radisson deal is much easier, being between two Chinese companies.”
According to a press release by Jin Jiang, it will acquire all shares in Radisson Holdings following the closing of the sale of the shares in Radisson AB.
“At present, again post-completion, there is a lot of work to be done to plan the integration of Jin Jiang’s acquisition of Radisson, and I expect that solutions will be well cooked before we see huge transformation of the individual hotel business units (Louvre, Radisson, Jin Jiang) under the Jin Jiang flag, as each are well established and have strong leadership,” Levy predicted.
HNA acquired the stake in Radisson in 2016. HNA’s chairman, Wang Jian, died suddenly in early July while on holiday in France, leaving co-founder Chen Feng to manage the company’s divesments.