Spanish hotels company Barcelo offers to take over NH Hotels

Grupo Barcelo has made a tentative takeover approach for rival NH Hotel Group (NHH.MC) to create the biggest hotel operator in Spain, where tourism is booming.

Family-owned Barcelo has proposed taking a 60 percent stake in a combined company and a majority of its board seats in a non-binding offer that values NH at 2.48 billion euros ($3 billion), NH said in a statement on Monday.

According to a letter sent to NH and published by the Madrid stock exchange, Barcelo has proposed a reverse takeover by NH, with Barcelo suggesting that NH pay for Barcelo with an issue of new shares at a value of 7.08 euros each, a 27 percent premium to NH’s average share price over the last three months.

NH Hotels’ future has been uncertain since representatives of its biggest shareholder, heavily indebted Chinese airline to property conglomerate HNA Group [HNAIRC.UL], were ejected from its board last year over accusations of a conflict of interest due to HNA’s takeover of a rival hotel group Carlston-Rezidor.

A combined NH-Barcelo company would have over 600 hotels and sales of around 3.5 billion euros, although Barcelo said its expression of interest was at this stage, “very preliminary”.

NH’s share price was up 11.4 percent at 5.57 euros at 1556 GMT.

Tourism accounts directly for around 11 percent of Spain’s economic output with the number of visitors to Spain having grown to a record high as sun-seekers shy away from the Middle East and North Africa due to concerns for their safety.

No one at HNA, which owns 29.5 percent of NH and 26 percent of bigger U.S. hotels company Hilton Worldwide Holdings Inc. (HLT.N), was immediately available for comment.

HNA is now facing close scrutiny in China over $50 billion worth of acquisitions made over the past two years resulting in an increase in its debt and struck a deal earlier this month to sell and repurchase some NH shares to raise cash for internal financing.

Meanwhile NH said on Monday it had recently approved a three-year strategic business plan and this was still in place, focused on boosting its exposure to higher-spending customers and expanding abroad while reducing debt.

Analysts said NH could prove a good complementary fit for Barcelo as the latter, which has over 230 hotels, has a stronger presence in the Caribbean, while NH with over 380 hotels, has leading positions in European cities.