British property and investment company Orb Estates has opened an auction of 37 Thistle branded hotels to potential bidders after a period of exclusivity enjoyed by Reit Asset Management expired.
Interested parties, which include other undisclosed investment companies, property investors and several individual entrepreneurs, are now free to place their bids for the portfolio of hotels after Orb's exclusive negotiations with Reit terminated Monday without a deal, a person familiar with the auction said Tuesday.
New York-based private equity firm Blackstone Group has decided it is not interested in the hotels despite press speculation that it could make a bid, a second person familiar with the situation said. Blackstone may have taken an initial look at the hotels, sources said, but on closer examination concluded that they did not offer an appealing investment opportunity.
The buyout firm has also been mentioned in press reports as a possible buyer of Thistle Hotels plc, a U.K.-based hotel operator that is searching for a white knight acquirer to help it fend off a hostile bid from Singapore-based investment firm BIL International Ltd.
Orb bought the Thistle-branded hotels that it is now trying to sell from Thistle in March 2002 for £600 million ($938.5 million) in a sale and leaseback transaction.
A source close to the talks said Orb has been marketing the hotels to other bidders while conducting the exclusive negotiations with Reit. Reit is reportedly willing to pay about £700 million for the hotels, although independent estimates for Morgan Stanley, which has leant Orb money, have placed a value on them of about £830 million.
Reit said earlier this week that it is still negotiating with Orb about buying the hotels but gave itself no more than a 50% chance of success.
The sense of urgency at Jersey, England-based Orb about selling the hotels reportedly stems from the company's need to pay off a number of creditors. Orb has declined to comment.
Orb has put other assets up for sale, including its Seafield logistics company and Poole Pottery businesses. Thistle Hotels, meanwhile, is continuing to look at ways to fight off the £300 million hostile bid from BIL.
The investment company, which is controlled by Malaysian businessman Quek Leng Chan, is offering 30% less per share for Thistle than the hotel operator's initial public offer price seven years ago. The biggest difficulty for Thistle's management, however, is the fact that BIL is the company's largest shareholder with a 46% holding.
Besides the search for a white knight, Thistle is also looking at a number of other options to derail the BIL bid.
These options include selling some of the company's more attractive hotels to raise cash to return to shareholders.
Neither Orb nor Reit are using outside financial advisers for their talks. Thistle's financial advisers are Merrill Lynch & Co. and Deutsche Bank AG. BIL is being advised by HSBC Investment Banking.
Source: The Deal
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