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More shareholders join attack against Millennium & Copthorne directors over sale bid

Disquiet among major shareholders in Millennium & Copthorne is growing after two companies accused the hotel group’s directors of “failing in their duty” to protect backers’ interests in a deal to take it private.
Last week, City Developments, the majority owner of Millennium, made a bid to buy the company which values it at ?1.8bn. The firm’s independent directors had agreed to recommend the offer, at 552.5p in cash for each share.
But a letter to Millennium’s independent committee of directions, seen by The Daily Telegraph, said that shareholders International Value Advisers and MSD Partners thought the proposal “significantly undervalues” the company. Between them, the two investment firms own an almost 9pc stake in the company.
“By recommending the proposed offer, M&C’s non-executive directors are failing in their duty to create maximum value for all shareholders,” the letter said.
It also suggested that the offer does not reflect a true value of the firm’s assets, and that the offer price is a 32.5pc discount to its value as set out in its accounts, rather than its share price.
It said the independent directors should have consulted other shareholders before recommending the offer, and called on the directors to have Millennium’s property portfolio independently valued in order to work out what its hotels are worth.
“We have been supportive of the company for a significant time, and would like to understand how you feel your obligations to guide the company through a takeover process are discharged by a recommendation of a wholly derisory proposal,” the letter added.
More shareholders join attack against Millennium & Copthorne directors over sale bid

Millennium & Copthorne owns hotels in a number of major UK cities, including Cardiff

Credit:
Chris Ison
The news comes just days after Fidelity International, which is also a major shareholder in Millennium, spoke out over its disgust over the handling of the potential buy-out.
Alex Wright, who runs the Fidelity Special Values investment trust, likewise claimed that because much of Millennium’s value is tied up in its property, an offer based on the share price does not truly represent what the company is worth. Many of the company’s hotels are in prime city centre locations.
Ned Hammond, an analyst from Berenberg, said the value of the properties could be “well over ?5bn”, but because Millennium has traditionally generated profit from owning its own buildings, it was unlikely to sell anything, making the value immaterial to the offer.
City Developments has pledged not to sell properties in London and New York, accounting for 34.2pc of the hotel assets by value, but has not made its plan clear for other locations.
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