Laguna Resorts to take over Banyan Tree

PHUKET: Laguna Resorts and Hotels Plc (LRH) has announced a plan to acquire the Banyan Tree Hotel Group, an acquisition that would make it the largest hotel group in Thailand and one of the biggest in Asia. LRH’s board of directors approved the plan on July 9. It has yet to be approved by shareholders, who will meet on August 16. The assets LRH will acquire include: · 100% of the Banyan Tree hotel management company that comes with seven contracts with Banyan Tree Hotels and two contracts with Allamanda resorts; · 97% of the Banyan Tree Maldives; · 49% of the Banyan Tree Phuket; · 23% of the Banyan Tree Seychelles, due to open in 2001; · 100% of Banyan Tree Spa and Angsana Spa which have operations in six hotels and four more pending; · 50% of Seychelles Tropical Resorts Holding which is the land bank company on the Seychelles. The acquisition will cost LRH around 3.5 billion baht, all of which will be financed by a capital increase of 268 million new shares, increasing LRH’s total number of outstanding shares from 85 million to 353 million. Of the 268 million, 177 million shares will be offered to the public at about 13.6 baht apiece; 70 million shares will be a private placement at 14 baht apiece, and the rest will go to the existing shareholders at par. The conversion ratio for the rights issue is four old to one new. Once the capital increase is complete, Bermuda-based Asian Property Partners Ltd will hold 24%, and Tropical Resource Co will have 40% of LRH. LRH’s chairman Ho Kwon Ping was reported in the Bangkok Post as saying, “The acquisition will create a major impact for the Laguna Group. Once it gets the Banyan Tree group, it will become the biggest listed hotel group [in Thailand], and Laguna will no longer be a Thai hotel company alone but a regional hotel company.” LRH is now the eighth-largest hotel company in Thailand with a market capitalization of about 1.7 billion baht. However, if the capital increase is successful, it will have a market capitalization of about 6.4 billion, assuming an x-rights price of 18 baht apiece. This will make LRH easily the biggest hotel company listed in the country, followed at a distance by Shangri-La and Dusit Thani. The market has so far responded positively to the acquisition plan. LRH’s share price rose 75 satang to close at 20.25 baht right after the board’s announcement.