Will A Higher Bid Emerge For Mantra?
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Mantra Group shares popped another 1.3% yesterday despite analysts at two investment banks casting doubt on the chances of another potential bidder emerging to top the $1.2 billion non-binding offer from Accor.
Analysts at Citi and Deutsche Bank yesterday downplayed the likelihood of a rival bid for Mantra Group because of its less attractive and "lower quality" operating model.
Mantra shares soared 16 per cent on Monday after the company said it had granted French hotel giant Accor due diligence on the back of a $3.96-a-share non bonding offer to acquire the country’s second biggest hotel and resort operator.
But in a note, Macquarie Research took another tack, suggesting that global rivals including Marriott, IHG, Choice and TFE Hotels could be interested in acquiring the country’s second biggest hotel and resort operator given the attractiveness of the Australian market.
But Citi Research said it did not see a high probability of a competing bid:
"While we have previously written about the potential for increased demand from Asian hotel owners and operators for Australian hotel assets, we believe Mantra's management letting rights (MLR) operating structure reduces the attractiveness for competing bidders," Mr Teeger said.
And note from Deutsche Bank also poured cold water on the likelihood of better offers, noting that while the bid from Accor implied an enterprise value to earnings (EBITDA) multiple of 11.2, a 20 per cent discount to Mantra’s listed peers, this "discount is appropriate in our view given Mantra's lower quality business model".
While not ruling out a competing bid, Deutsche Bank said Accor was “uniquely positioned amongst the hotel majors to manage Mantra’s properties given its experience with MLRs, particularly post its acquisition of Mirvac Hotels in 2011”.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.