U.S. financier seeks majority control of Fairmont Hotels
U.S billionaire financier Carl Icahn has launched a bid for majority control of Fairmont Hotels and Resorts â the owner of many of Canada's most historic hotel properties.
But Fairmont called the bid "coercive" and signalled it would oppose it.
Fairmont owns or operates more than 80 properties around the world, including the Chateau Laurier in Ottawa, the Queen Elizabeth in Montreal, the Newfoundland in St. John's, the Royal York in Toronto, Chateau Lake Louise and the Banff Springs Hotel in Alberta, the Hotel Vancouver and Victoria's Empress.
Fairmont also owns Delta hotels in Canada.
Icahn Partners LP and Icahn Partner Master Fund LP are offering to buy up to 29.6 million shares of Fairmont (TSX:FHR) for $40 US a share. That would give the Icahn group 51 per cent of Fairmont.
Last month, Icahn announced that he had acquired 9.3 per cent of Fairmont's stock, saying he wanted the Canadian-based luxury hotel chain to take steps to boost the company's "undervalued" share price.
Icahn indicated Friday that he'd like to flip Fairmont to another hotel company.
"The offerors believe that Fairmont and its shareholders would benefit if the company were acquired in its totality by a larger hotel operator that is able to more effectively take advantage of economies of scale," a release from Icahn said.
Icahn is known as a corporate raider. He buys stakes in companies that he believes are undervalued and presses for changes in management practices to boost share prices. His past targets have included Time Warner and Blockbuster.
Icahn bid 'coercive': Fairmont
Fairmont said its board of directors would make a formal recommendation to shareholders once it gets the takeover bid. But a release from the company indicated it has several problems with Icahn's bid.
"A tender offer for shares that, were it successful, would give Mr. Icahn control of 51 per cent of the company without paying a takeover premium to all shareholders would be unacceptable," Fairmont CEO William Fatt said in a release.
Fatt also noted that the bid would not comply with Fairmont's shareholder rights plan.
Fairmont shares were up $1.83 to close at $47.05 on the TSX. In New York, the shares rose $1.81 US to $40.60 US.