Major hospitality merger gets the nod

Source: Tourism Update, 15/08/2016

The merger transaction between Tsogo Sun and Hopitality Property Fund
was approved by the Competition Tribunal last week.


Tsogo Sun will acquire control of Hospitality Property Fund (HPF) by
vending a portfolio of hotels into the Hospitality Property Fund in
exchange for shares, after a deal was approved by the Competition
Tribunal. The deal will add 16 hotels to Tsogo`s portfolio.


"Tsogo Sun and Hospitality are pleased to announce that the
transaction has been approved by the Competition Tribunal, subject to
conditions accepted by both parties, and that a merger clearance
certificate has been issued," a statement dated August 11 reads.



"We now own an additional 16 hotels as a result of this merger. The
hotels continue to be operated and leased by the existing third
parties, including Radisson, Protea, aha and, in the case of the
Holiday Inn and Crown Plaza, by Tsogo," Marcel von Aulock, CEO Tsogo
Sun, told Tourism Update.


In response to the fact that Tsogo Sun now owns hotels managed by
competitors, Von Aulock said multi-brand multi-operator property funds
were quite common globally. "To the extent that there are
sensitivities around certain information from the third-party
operators, this has been addressed through a protocol agreed with the
Competition Authorities," he added.


Neil Bald, CEO of aha, said aha would rely on the conditions upon
which the merger went through. "We are protected in terms of how much
information we can share."


He added that the merger might only affect operations in certain areas
where the majority of the properties were, such as in the Cape Town
region. Bald said the merger would provide more insight into the
performance of the hotels in Cape Town for Tsogo Sun.


Mark Satterfield, Chief Operating Officer, Middle East & Africa,
Marriott International described the developments as "positive for the
industry". "Hospitality Property Fund will have new hotels entering
their portfolio as a result of this transaction. We believe that HPF
will be strongly positioned to drive future hotel development which
will contribute to the overall growth of the hospitality industry,"
said Satterfield.


A number of administrative conditions remain to be fulfilled before
the deal goes through, including receipt of confirmation by the
Companies and Intellectual Properties Commission that it has accepted
and placed on file all relevant documents required to effect the
transaction. The transaction is now unconditional in accordance with
its terms.


"Tsogo Sun and Hospitality Property Fund anticipate that the remaining
conditions precedent to the transaction will be fulfilled by August
31, such that the effective date of the transaction will be September
1," said a statement.


"Tsogo acquired Majormatic in April 2016 and have been leasing and
operating the Holiday Inn Sandton and Crowne Plaza Rosebank from HPF
since then," said Von Aulock.


A further announcement will be released regarding fulfilment of the
outstanding conditions precedent to the transaction, which will
include a detailed timetable for its implementation.



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