First shots fired for Six Continents

Hugh Osmond, the pubs entrepreneur, yesterday confirmed he was considering a multi-billion pound bid for Six Continents in a move that could spark a takeover battle for the demerging pubs and hotels group. In an audacious move, Mr Osmond is structuring the cash and shares bid via an Aim-listed cash shell, Capital Management and Investment, which holds £14m of Six Continents shares.

Mr Osmond, who has a 6.56pc stake in the company, yesterday became its executive chairman, while his business associate Alan McIntosh became finance director.

Capital Management said it was "considering making a takeover offer for Six Continents" but added: "No assurance can be given that any offer will be made".

It said "a further announcement will be made in the near future". Six Continents shares rose 35.5 to 590p, valuing its equity at £5.1 billion. It also has £2.5 billion of debts. Capital Management shares rose 1.75 to 19p, valuing it at just £44m.

Mr Osmond, who has lined up billions of pounds of debt from CSFB and other banks, was last night working on the bid's structure, which is being discussed with the Takeover Panel.

He may try to persuade Six Continents' existing lenders, led by Barclays, HSBC, JP Morgan, Royal Bank of Scotland and Salomon Brothers, to help finance his bid, secured against Six Continents' £7.5 billion assets.

Mr Osmond plans to break up the group, possibly retaining the Mitchells & Butlers pub business. He has held talks with Hilton Group about selling on some of Six Continents' hotel assets.

Six Continents said it had not received any approach from Capital Management, adding: "The board will review and consider on its merits any proposal that offers a combination of compelling value and certainty of delivery."

Richard North, the chief executive of the hotels business, said: "I always anticipated he [Mr Osmond] would do something." He insisted the demerger, due to be voted on by shareholders on March 12, was the "best route to generate value", adding: "I sincerely believe I can do something special with this hotel division."

David Liston, fund manager at 1pc shareholder Gerrard, said "I do have some doubts over Hugh Osmond's ability to fund a bid", adding that he failed to deliver a mooted offer for Pizza Express. - Source:  money.telegraph.co.uk 

Osmond picks CSFB as adviser

Entrepreneur Hugh Osmond,  said on Thursday he had appointed Credit Suisse First Boston (CSFB) as nominated adviser and joint broker.

Osmond's bid vehicle, Capital Managament & Investment Plc <CMIP.L>, said it had appointed CSFB with immediate effect. Brewin Dolphin Securities Ltd remains as joint broker to the company.

(Reuters News Service)

Osmond eyes full listing for Six Continents bid

Hugh Osmond, said on Thursday he would seek a full listing for his bid vehicle if his offer is accepted.

The move would remove one of the key obstacles to Osmond making an all-share bid for the hotels and pubs group, as institutional investors would be unlikely to want to hold shares in bid vehicle Capital Management and Investment plc <CMIP.L>.

Osmond also said his bid was contingent on Six Continent's planned demerger into two separate hotels and pubs companies not going ahead.

He said he had held "substantive discussion" with banks and potential strategic partners about his bid, which would see Six Continents broken up.

(Reuters News Service)

Heartbreak hotels: Shareholder dissatisfaction, a poor record on acquisitions and now Hugh Osmond all mean big trouble at Six Continents

Hugh Osmond has built a reputation for audacious investment manoeuvres which have left many a veteran City deal broker slack-jawed with disbelief. Yesterday, there was confirmation that he hopes to attempt his most ambitious turn to date - a takeover of hotels and pubs operator Six Continents.

A bid through his Capital Management & Investment would be one of the biggest reverse takeovers the Square Mile has ever seen.

While CMI is a shell company with cash reserves of pounds 41m, Six Continents has a value, including debt, of pounds 6.6bn and is the largest hotel operator in the world, running the Intercontinental, Crowne Plaza and Holiday Inn brands. In the UK, the company also runs the Britvic soft drinks business and 2,000 pubs and restaurants, including the All Bar One and Harvester chains.

Speculation over how much Mr Osmond may pay ranges between pounds 7bn and pounds 8bn, but his interest alone was enough to add pounds 315m to Six Continents' market value yesterday, as well as to prompt a 10% rise in CMI shares. Any offer is expected to be substantially paper-based. - The Guardian

Europe's Hotel Industry: 
2002 Drop in Business Encourages Operators to be Prudent in Terms of Development

• The year 2002 closes with a drop in the RevPAR by 1.0% in Europe.

• France does better than Germany, the United Kingdom or Spain at end 2002.

• Budget categories resist perfectly, the 4* a bit less. 

• Fewer buyouts in 2001, the supply of the top 10 European groups grows by 3.7% versus 17.6% the previous year.

• French chain Accor strengthens its position as number one hotel group in Europe (+13.2%). The hotel supply of the American groups Marriott and Choice progress by more than +5%.

Annual results of chain hotels
at end December 2002

MKG Consulting – February 2003 –* preliminary data 
Official statistics of hotel groups

Business down slightly in Europe in 2002

In Europe, the preliminary data of MKG Consulting for the year 2002 show a drop in the RevPAR by 1.0%. The increase in average daily rates by 1.4% is not enough to compensate for the drop in occupancy rate to as far as 1.7 points. This performance nonetheless translates as a slight improvement with respect to 2001 (-2.6% at the end of the preceding business year). Hoteliers did not give in to panic in 2002 and generally opted for slightly increasing rates.

A positive fact is that the budget segments (0/1/2*) confirm their excellent health in 2002 with a RevPAR up by 5.2% in 2* for example. On the other hand, the mid- and up market segments post a drop in revenue per available room (respectively –0.8% and –2.9%). These categories, for which the average occupancy rate is around 65%, continue to suffer from a lack of international clientele.

On the top four chain hotel markets in Europe (which in all account for more than 75% of the supply of chains in Europe), France withdraws thanks to a 1.7% increase in RevPAR. Spain also posts activity that holds up well. Despite a non-negligible drop in occupancy rate (-2.1 points), the country closes the year 2002 in perfect stability with respect to 2001.

On the other hand, the United Kingdom, which is more dependent on American clientele, sees its RevPAR drop by 1.9% with respect to 2001. As for Germany, the economic slump experienced by the country is largely responsible for the significant drop in the RevPAR (-5.3%). It may be observed that on the whole Southern Europe experienced fewer difficulties than the North. In 2002 the Mediterranean countries benefited from carryovers of clientele that limited the drop. 

Annual ranking of the top 10 ten hotel groups
in Europe (01/01/2003)

MKG Consulting – February 2003
Official statistics of hotel groups    (1)     Supply at end September 2002

Growth continues for the top 10 European groups

The top 10 European hotel groups finally resisted the slowdown of business with a room capacity that gains 3.7% and 22,588 rooms. This volume is equivalent to the growth posted by the French brand Accor, the indisputable leader of the European hotel industry with 1,965 hotels and 203,127 rooms (+13.2%). The Accor group’s advance on these "challengers" increased significantly at the end of 2002. This development essentially took place in Germany, with the move of hotels of the German group Rema to the Mercure brand in April 2002 and the acquisition of around 30% interest in the capital of Dorint.

No change in the ranking of the top 5 groups, but significant movement in the second part of the ranking

The three "followers" of the group Accor, Best Western, Six Continents and Louvre / Envergure show a slight drop in their supply (respectively –0.2%, -1.1% and –3.5%) but these drops do not challenge the ranking of the top 5 groups. 

The 4.5% increase posted by Hilton International is not enough to make the British group gain a rung in the 2003 ranking. Next to these drops, it may be observed that the drop posted by Louvre / Envergure results from the strategy of brands in the group to rationalise brands. Concerning Six Continents, the group pursues the unrolling of Holiday Inn, of Express by Holiday Inn and of Crowne Plaza in Europe while the chain Posthouse (acquired in 2001 from the group Compass) has disappeared from the British territory. 

Meanwhile, the American group Marriott, which made Europe one of its priorities for development, posts a strong increase as of January 1, 2003: +7.8% and 2,989 additional rooms. Another significant move is that of Choice whose supply grows to 1,843 rooms (+5.8%) and rises a rung in the ranking.

Finally, among the first 10 groups, the Spanish group NH posts a fairly significant drop (by more than 14%). In fact, in February 2002, NH sold the brand Golden Tulip – which it had acquired just a few months earlier – to the franchise’s managing team. This drop in the Spanish operator’s supply could nonetheless be compensated in part by one of the most spectacular operations of the year: the acquisition of the German brand Astron (one of the major operators on the domestic market) by NH.

Globally, the year 2002 will have been marked by a great deal of prudence in terms of development. The top 10 groups saw their supply progress by 17.6% at the end of 2001.

The slump in the hotel business for some emblematic destinations (the capitals), the depression of the financial markets and the uncertain political perspectives are largely responsible for this. Even if the perspectives for 2003 are not precise because it is difficult to forecast the consequences of an intervention in Iraq, the performance of European hotels improved in the second semester. With the confirmation o