- June 17, 2016
- Posted by: admin
- Category: Tsogo Sun Holdings
SOUTHERN Sun Hotels’ bid to take a controlling share in Hospitality Property Fund (HPF) overcame a challenge on Wednesday unexpectedly when one of the parties opposed to the deal withdrew its application to intervene.
Argute Consulting, which is run by Andrew Rogers, the former CEO of HPF, withdrew its application to intervene in the merger hearing.
Gaming and leisure group Tsogo Sun, which owns Southern Sun Hotels, wants HPF to become its hotel arm.
Last year, it was agreed that Tsogo, which is headed by Marcel von Aulock, would inject 10 hotels, valued at about R1.8bn, into HPF, in exchange for 51% of Hospitality’s ordinary shares, on condition that it adopts a single share structure.
Argute had raised concerns that Tsogo Sun would have access to competitively sensitive information if the deal went ahead, and that Tsogo Sun could refuse to renew leases of hotel operators with a view to take over the operations.
Rogers withdraw the application to interrupt the tribunal from going ahead in August.
The Competition Commission had recommended to the Competition Tribunal that the Tsogo Sun-HPF deal go ahead, with conditions. Tsogo Sun is challenging the conditions.
“There are no objections to the merger left, just the dispute with the commission on the conditions they wanted to impose. Such we will not accept,” Von Aulock said.
He said neither Hospitality nor Tsogo had had any contact with Rogers about the merger.
“Neither party has spoken to (Rogers) at all in this whole process. His objections were, quite frankly, nonsense in the first place. He wanted all the hotels sold and was offering a broker service for a fee,” said the Tsogo Sun head.
He said the conditions that were proposed on the merger had to be opposed.
“The conditions they want effectively prohibit Tsogo from managing or integrating HPF, which is unacceptable to us. We will be the majority owner of the fund, and intend putting the majority of our hotel assets into the fund. Obviously, we can’t accept conditions like that.”
There are six conditions in total. The first one is that the operations of the target firm are kept separate from the operations of the acquiring firm.
The second is that any director appointed to the board of the acquiring firm cannot be appointed to the board of the target firm.
The third is that the employees, management and executive and nonexecutive directors of the acquiring firm are not involved in the operations of the target firm.
The fourth is that the employees involved in the business operations, management, and executive and nonexecutive directors of the target firm sign strict confidentiality undertakings that ensure that no competitively sensitive information is made available to any of the acquiring firm’s employees, management, and any executive and nonexecutive directors.
Fifth, the employees involved in the operations of the acquiring firm, specifically its hotel business, do not have access to the information technology systems of the target firm. The sixth condition relates to Southern Sun Hotels having to notify the Competition Commission if it takes over the operations of HPF’s hotels.
Source: BDLive – Alistair Anderson