Corinthia will take over the Island Hotels Group for almost €50 million in what has been described as a “substantial deal” by stockbrokers.

Corinthia, through its investment arm, International Hotels Investment, yesterday reached a “conditional agreement” with the Zahra family and other large shareholders in Island Hotels over the sale.

IHI will fork out approximately €36 million in cash and €9 million worth of new shares, a spokesman for Corinthia told Times of Malta.

“The deal is expected to be finalised within the next six months after a thorough due diligence and all regulatory procedures are undertaken,” the spokesman said.

IHI and Island Hotels, which has the Radisson franchise in Malta, are both listed on the Malta Stock Exchange and the agreement was made public in a company announcement.

Island Hotels Group CEO Winston Zahra Jr described the development as “an evolution off the Zahra family’s involvement in the tourism sector”.

When contacted he said this was an opportunity for the family group to grow in a different way. “We don’t see this as selling out.”

Corinthia’s takeover of Island Hotels would see the company own three hotels on a vast tract of land at St George’s Bay where it wants to create a six-star resort. Photo: Matthew MirabelliCorinthia’s takeover of Island Hotels would see the company own three hotels on a vast tract of land at St George’s Bay where it wants to create a six-star resort. Photo: Matthew Mirabelli

Mr Zahra said the family would take up shares in IHI and Island Hotels would become a subsidiary company of IHI.

“We will remain involved and I will be the chairman and CEO of Island Hotels,” he said, adding he was looking forward to the changes ahead.

Mr Zahra said more than 91 per cent of Island Hotels’ shareholders had already signed up to the deal.

The Zahra family, through three different companies, holds some 73 per cent of shares in Island Hotels and former Manchester United stalwarts Gary Neville and Ryan Giggs together hold about six per cent.

There are other minor shareholders from the public.

The deal was welcomed by the stockbroker community and was described by a leading market analyst as a positive development.

“It is a substantial deal by Maltese standards and the takeover will generate more potential for IHI, the tourism sector and Malta,” he said, adding the minor shareholders would gain by being part of a bigger company.

It is a substantial deal by Maltese standards

The deal put a lid on speculation that had been growing in the sector over the possible purchase of the Radisson Hotel in St George’s Bay by Corinthia to include it as part of the ambitious project to turn the Corinthia San Ġorġ and Marina hotels next door into a six-star resort.

The company announcement yesterday made reference to “additional development opportunities” created by the amalgamation of Island Hotels Group’s operations in St George’s Bay with those of IHI’s neighbouring hotels.

IHI said Island Hotels had a tentative enterprise value of €106.5 million, which was the company’s value plus money owed to third parties. IHI said it would proceed with a voluntary offer for all the shares of Island Hotels when the due diligence was completed.

“The price for Island Hotels Group Holding shares would be paid as to €1 in cash, split into two tranches, the first tranche of 55c payable on completion and the second tranche payable 12 months later.

“In addition to this cash component, Island Hotels Group shareholders will also receive 0.246 IHI shares for each IHG share held, through the issue of nine million shares by IHI.”

Last May, Island Hotels Group sold its shareholding in Coastline Hotel to the operators of ESE language school and dropped plans for a major refurbishment at the St George’s Bay Radisson Hotel in September.

The group had raised €35 million in bonds last year and would have to seek approval from bond holders since the money may not be used for the intended purpose once the new owners take over.

kurt.sansone@timesofmalta.com

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