Chinese businesses are racing to divest their real estate foreign assets, but one major hotel company may go from one conglomerate to another. Radisson Hotel Group may change hands from Hainan, China-based HNA Group to Jin Jiang International Holdings if a bid from the Shanghai-based Chinese state-owned tourism and hospitality company goes through.
HNA began considering the sale of the Radisson Hotel Group in June as part of recent global divestments. The conglomerate already has sold more than $17 billion worth of assets this year to reduce debt.
If both companies agreed to a deal, HNA could earn at least $2 billion from the sale, according to a report from Bloomberg News, whose sources indicated a potential sale could also generate offers from other bidders.
HNA & Rezidor
HNA built an empire worth an estimated $230 billion in assets on a foreign buying spree that saw it diversify into tourism and hospitality via major deals to buy shares in companies that included Hilton, and international airlines such as Virgin Australia, France’s Aigle Azur and TAP in Portugal.
HNA acquired Carlson Rezidor Hotel Group, now Radisson Hotel Group, two years ago in a move that some shareholders saw as a conflict of interest. At the time, HNA owned almost 30 percent of NH Hotels and Carlson Rezidor was viewed as a direct competitor. Subsequently, London hedge fund Oceanwood Capital Management, which owned a 10-percent stake in NH Hotel Group, called for the chairman of NH Hotel Group to temporarily stand down until the company resolved any conflict of interest related to HNA's buy of Carlson Rezidor.
Last month, while on a business trip to Provence, France, HNA co-founder and co-chairman Wang Jian fell to his death in what police are calling an accident. Wang’s death was seen as likely to complicate the offloading of its assets. Corrine Png, CEO of Asian transport equity research firm Crucial Perspective, told Bloomberg that the loss would put the restructuring plans back on the drawing board. “Some of the recent restructuring plans has resulted in HNA Group, and ultimately Hainan Province Cihang Foundation, increasing control over the subsidiary and associate companies, instead of decreasing control,” she said in early July. “This may not sit well with the government.”
Radisson Hotel Group's portfolio consists of more than 1,400 hotels operating or in development under its eight brands and its hotel operating arm, Radisson Hospitality AB, manages hotels in Europe, the Middle East and Africa. HNA had one of the highest amounts of debt in corporate China, reaching $94 billion in 2017 as borrowing costs increased to $5.1 billion. The sales include a $6-billion stake in Hilton and a portion of its holdings in Deutsche Bank AG.
The conglomerate offloaded a Minneapolis office tower in a $320-million deal with Samsung in June. The final price was about $5 million more than the price HNA spent on the building. The same month, the group also sold its 26.5-percent stake in NH Hotel Group in a $729-million transaction with Minor International.
The sale of Radisson Hotel Group would align with Jin Jiang's push to expand internationally through acquisitions. The company owns 12.3 percent of Accor SA along with the Peace Hotel in Shanghai. Jin Jiang's recent acquisitions include Sarovar Hotels, Groupe du Louvre and 7 Days Group.