Two years after acquiring the Minnesota-based hotel group now known as Radisson Hospitality, Hainan-based conglomerate HNA has agreed to sell off its interest in the 1,400 venue hotel chain to a consortium led by Shanghai-based Jin Jiang International Holdings, according to a statement by Radisson late Thursday.
The state-run Chinese hotel group and its unnamed co-investors are reported to be paying $2 billion for the group in a multi-part transaction which begins with the consortium acquiring just over 51.15 percent of the outstanding shares of Stockholm-listed Radisson Hospitality AB at 35 Swedish krona ($3.89) per share, for a total of about $332 billion for the stake.
With the transaction, HNA is giving up the last vestige of what once looked to be a world-leading hospitality empire after the airline-based group, starting in 2016, spent nearly $9 billion to acquire stakes in Hilton Hotels, Spain’s NH Hotels and Radisson’s predecessor Carlson Rezidor Hotels. Since the first of this year, HNA has now sold off NH Hotels, Radisson, and most of its Hilton holdings.
Selling Radisson at a Discount
In addition to buying the 51 percent stake in Radisson, the Jin Jiang group has agreed to buy an additional 18.5 percent stake in the company which is held by HNA Sweden, and has been pledged as security for a loan, according to the terms of the deal. Jin Jiang’s purchase price represents a five percent discount to the company’s share price at the close of trading on Thursday.
Under Swedish law, following the share purchase, which is expected to close by the end of this year, Jin Jiang is required to make a general offer for all outstanding Radisson shares.
The acquisition would give Jin Jiang control over the Radisson group’s brands, including Radisson, Radisson Blu, Radisson Red, Park Inn and Country Inn & Suites, adding to the more than 6,700 hotels owned or managed by Jin Jiang in China and other locations globally.
HNA is understood to have paid around $2 billion to acquire its holdings in then Carlson Rezidor in 2016.
HNA Continues to Sell Off Hotel Assets
HNA’s sale of Radisson is part of a high-velocity asset sale that the group has been conducting this year in an effort to pay down debts that have been estimated at as much as $100 billion.
“In 2018, HNA has executed over $17 billion in divestitures, but the company will still face tremendous pressure as massive debts come due next year,” said Brock Silvers, managing director of China-based investment advisory firm Kaiyuan Capital. The veteran private equity investor estimated that the mainland conglomerate may have less than a 50-50 chance of surviving 2019 if it cannot restructure its liabilities.
In June of this year, HNA sold its controlling 25.2 percent equity stake in NH Hotels to Thailand’s Minor International Plc for a total of 619 million euros ($723 million), after the company in March sold 25 percent stakes in a pair of Hilton Hotel-related groups for a combined $2.5 billion.
In April, HNA notified US regulators that it would begin selling down its $6.5 billion stake in hotel operator Hilton Worldwide Holdings. The group has also sold property assets in the US, Singapore and other locations this year.
Jin Jiang Grows to World’s 7th Largest Hotel Group
HNA’s hotel heartache is providing opportunity for Jin Jiang, which with the acquisition becomes the seventh-largest hotel company in the world with some 344,000 rooms, according to industry research firm STR.
“Jin Jiang is the obvious choice to assist HNA,” Daniel Voellm, managing partner of US hospitality consulting firm HVS told Mingtiandi. “Radisson will give Jin Jiang a boost in terms of scale and global reach, the full power of which will be realized when its business divisions become more integrated.”
In January 2017 Jin Jiang’s Louvre Hotels unit bought a reported 75 percent stake in India’s Sarovar Hotels, a move that instantly made the Chinese group one of India’s biggest hotel operators.
The Shanghai government hotel group purchased Louvre in 2015 at a price said to be in excess of $1.49 billion. The group also owns 12.3 percent of France’s Accor group and was said to have been among the losing bidders for Starwood Hotels in 2016.