LONDON — Six Continents PLC, owner of Holiday Inn and Inter-Continental hotels and several chains of pubs, has rejected a hostile takeover bid worth $8.8 billion.
Six Continents said the offer, launched Monday by food and drinks entrepreneur Hugh Osmond, gives shareholders "nothing they do not already own except significant risk."
If successful, Osmond's bid could sink the hotel company's plan to separate its hotel business from its pubs and to return $1.1 billion to shareholders. Osmond has criticized the plan and accused Six Continents' management of destroying shareholder value.
Under his proposal, investors would receive 36 shares in Osmond's acquisition vehicle, Capital Management Investment, for each share they own in Six Continents. The offer values Six Continents at 648 pence ($10.24) a share. Shareholders also would have the option of taking a mixture of cash and stock that values the company at 643 pence ($10.16) per share.
The management of Six Continents countered that it has "a clear strategy to create value" through the planned separation of its hotel and pub businesses. Shareholders would get a stake in two focused businesses, plus a cash payment "with the prospect of more to come," it said.
By contrast, the company said Osmond's offer was "remarkably short on detail. His team has no partner, and it envisages selling off hotels at the bottom of the business cycle when their market value was at its lowest," it added.
The group owns the Inter-Continental, Crowne Plaza and Holiday Inn hotel businesses, together with British pub and restaurant brands, including All Bar One and O'Neill's. It also has a large stake in British soft drinks manufacturer Britvic, which is 90 percent owned by Britannia Soft Drinks, in which Six Continents has a controlling interest, and 10 percent by Pepsi Cola International.
Six Continents wants to spin off its pubs from its hotels and soft drink operations. Since Osmond publicly confirmed his interest in the company two weeks ago, Six Continents has increased the estimated annual cost savings from a separation to $100 million from $65 million. The company has also said it's in talks about several possible asset disposals.
Osmond owns part of the restaurant chain PizzaExpress and a network of 1,400 pubs, Punch Taverns, which he bought in 1997 from Six Continents, known then as Bass. He added to that in 1999 with 3,600 pubs he acquired from Allied Domecq PLC.
According to Osmond, he would double the amount of money to be returned to shareholders and plans to convert billions of dollars worth of Six Continents properties into cash, also to be passed on to shareholders. He would consider selling off Six Continents' hotels but only when prices are attractive, he said.
Osmond's offer is conditional on shareholders voting against the proposed spin-off or on Six Continents' postponing for at least 65 days a March 12 meeting at which shareholders are to vote on the plan.