Bottom line: A Chinese buyer could have a strong chance of winning the bidding for US hotel operator Starwood, with CIC most likely to emerge as Beijing’s preferred candidate among a trio of interested local buyers.
Chinese buyers eye Starwood Hotels
Just a day after China’s 2 leading travel sites put aside their bitter rivalry and formed a major new alliance, we’re getting word of yet another major deal in the hot tourism sector. This time media are saying 3 Chinese buyers are eyeing Starwood (NYSE: HOT), one of the world’s top hotel operators. The 3 potential bidders include 2 of China’s leading private equity investors, China Investment Corp (CIC) and HNA Group. The third is one of China’s top hotel operators, Jin Jiang (HKEx: 2006; Shanghai: 600574), which has been on a buying spree recently both at home and abroad.
If one of the 3 succeeds, the deal would mark the largest purchase ever of an offshore asset by a Chinese buyer, based on Starwood’s latest market value of $15 billion. Word of the deal comes just a day after leading domestic online travel agents Ctrip (Nasdaq: CTRP) and Qunar (Nasdaq: QUNR) buried the hatchet in their bloody battle for share in China’s fast-growing travel market. A Starwood deal would also come less than a week after US-British cruise operator Carnival (NYSE: CCL) formed a new joint venture with 2 Chinese partners. (Chinese article) Read Full Post…
Bottom line: Recent moves by Baidu, SouFun and 7 Days reflect frustration by Chinese companies at lack of understanding by western stock buyers, but also spotlight the need for these companies to better educate investors about their stories.
Better investor education needed from Chinese companies
A trio of headlines last week highlighted the growing financial alternatives for high-growth Chinese companies that have lately felt unappreciated by global stock buyers. The news was quite varied, led by a threat from online search leader Baidu (Nasdaq: BIDU) to privatize its shares from New York, and a large new investment by 2 major private equity firms in online real estate services giant SouFun (NYSE: SFUN). Meantime, the formerly New York-listed 7 Days hotel chain was in headlines as it sold itself to Shanghai’s Jin Jiang International (HKEx: 2006; Shanghai: 600754).
Each of these stories is quite different, but all reflect a growing arsenal of tools that high-growth private Chinese companies have to boost their profiles and valuations as they become more skilled at playing in global financial markets. At a more fundamental level, each of these moves also represents a form of education for investors, which is critical to helping outsiders understand a group of companies from China’s vibrant but still largely unknown private sector. Read Full Post…
The following press releases and media reports about Chinese companies were carried on September 19-25. To view a full article or story, click on the link next to the headline.
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Bottom line: Jin Jiang’s pursuit of Shenzhen-based Vienna Hotel Group, combined with other recent M&A, could vault it to China’s leading hotel operator, though its sudden rapid expansion looks at least partly politically motivated.
Jin Jiang aims high with Vienna Hotel talks
Shanghai-based hotel operator Jin Jiang’s (HKEx: 2006; Shanghai: 600754) recent appetite for M&A continues to grow, with word that the company is in talks to buy a Shenzhen-based rival in a deal that would boost its hotel count by a third. A successful purchase of the privately held Vienna Hotel Group would mark the latest mega-purchase by Jin Jiang, which has suddenly emerged as China’s hot hotel company to watch.
Jin Jiang is certainly a household name in my adopted hometown of Shanghai, and this latest deal, when combined with others, would move the company into the ranks of one of China’s top 5 operators and the only one with a global presence. There’s only one problem with all of this, namely that Jin Jiang is one of the only top players that’s a state-run company. That contrasts sharply with other leading names like Homeinns (NYSE: HMIN), China Lodging (Nasdaq: HTHT) and Plateno, that are all privately owned. Read Full Post…
The following press releases and media reports about Chinese companies were carried on August 8-10. To view a full article or story, click on the link next to the headline.
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Jin Jiang (HKEx: 2006) in Talks To Buy China-based Vienna Hotels Group (Chinese article)
JD.com (Nasdaq: JD) to Buy 10 Pct of Yonghui Superstores for 4.3 Bln Yuan (Chinese article)
Gome’s (HKEx: 493) E-commerce Unit Appoints New Management in Drive to IPO (English article)
Anbang Insurance to Make Over $1 Bln Bid for Japan’s Simplex: Sources (English article)
Youku Tudou (NYSE: YOKU) Changes Name, to Spend 10 Bln Yuan on Content Development (Chinese article)
Bottom line: Jin Jiang’s purchase of a large Chinese hotel operator reflects its ambitions to become a leading player in China’s slowing market, though it could be undermined by its roots as a state-run company.
Jin Jiang to take control of Plateno
We’re finally seeing some big consolidation start to happen in China’s crowded hotel industry, with reports that Shanghai-based operator Jin Jiang (HKEx: 2006; Shanghai: 600754) is near a deal to buy the parent of formerly New York-listed 7 Days. The move comes just 7 months after Jin Jiang made another major purchase in Europe, and signals the company is clearly becoming a player to watch in China’s lodging space.
China’s hotel industry is undergoing some major changes right now, as the market suffers from oversupply created during a major build-up in the first decade of the 21st century. Leading player Homeinns (Nasdaq: HMIN) is in the process of privatizing after its stock languished on Wall Street due to lackluster growth prospects. China Lodging Group (Nasdaq: HTHT), operator of the Hanting chain, also made a major move late last year when it announced a major tie-up with French hotel giant Accor (Paris: AC). (previous post) Read Full Post…
The following press releases and media reports about Chinese companies were carried on July 11. To view a full article or story, click on the link next to the headline.
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Jin Jiang (Shanghai: 600754) Prepares to Acquire Hotel Operator Plateno (Chinese article)
Great Wall Motor Seeks Up to $2.7 Billion for New-Energy Cars (English article)
Baidu (Nasdaq: BIDU) Take-Out Delivery Unit Gets $200 Mln Funding, Plans Spin-Off (Chinese article)
Partner of Alibaba (NYSE: BABA) Arm Said to Plan New Fundraising Round (English article)
Jiayuan (Nasdaq: DATE) Still Moving Ahead With Privatization – CEO Email (Chinese article)
Bottom line: A new push into mid-range hotels could provide a boost for Homeinns and other operators, but the relief is likely to be short lived as that part of the market also quickly becomes saturated.
Home Inns goes upscale with new brands
Hotel operators are rushing to fill a relative void in the middle of China’s market, with word that leading budget chain Homeinns (Nasdaq: HMIN) has launched new brands aimed at consumers willing to spend a bit more during their travels. The move looks relatively smart, as growth slows at the top and bottom ends of the market due to overbuilding and a slowing economy that is putting a damper on domestic travel. But Homeinns isn’t the only one to notice this void, and recent similar moves by others could see this middle part of the market also quickly become saturated and oversupplied. Read Full Post…
Bottom line: Accor’s new tie-up with China Lodging looks like a smart deal that will bring together complementary partners, and is likely to spark a new round of similar cross-border partnerships in the year ahead.
China Lodging moves in with Accor
A development I’ve been predicting for quite a while has finally happened in China’s lucrative but crowded hotel space, with news of a major new tie-up between global giant Accor (Paris: AC) and domestic budget operator China Lodging Group (Nasdaq: HTHT), which also calls itself Huazhu. The tie-up will essentially see China Lodging take over operation of much of Accor’s China portfolio, and could ultimately see Accor purchase the Chinese company outright. The move could also spark a round of similar tie-ups that sees other major foreign operators pair up with Chinese partners like Home Inns (Nasdaq: HMIN). Read Full Post…
Bottom line: The record-breaking purchase of an Australian trophy hotel by a China buyer is part of a growing Chinese foreign real estate buying binge, which could ultimately produce a global bubble.
Chinese insurer buys Sydney Sheraton
China’s nascent but rapidly growing appetite for foreign hotels continues to grow, with word that another previously unknown Chinese insurer has snapped up a trophy property in Australia for a record price. In this case it’s China’s Sunshine Insurance Group that’s buying a major Sheraton property in Sydney from global giant Starwood Hotels (NYSE: HOT) for an inflated price of A$463 million, or about $400 million. This sale is the third of a major western hotel asset to a Chinese buyer in just the last 2 months, and looks a lot like similar waves from the past 30 years that saw Asian buyers purchase trophy western real estate at inflated prices. Read Full Post…
Bottom line: Jin Jiang is emerging as China’s first global hotel brand, but its inexperience and focus on property ownership with its first major acquisition are likely to produce poor results for the campaign.
Jin Jiang checks into Europe
Domestic hotel stalwart Jin Jiang (Shanghai: 600754; HKEx: 2006) is quickly emerging as China’s hotel company to watch on the global stage, with word that it’s on the verge of a deal to buy Louvre Hotels Group, Europe’s second largest operator. The acquisition would be the biggest so far for Jin Jiang, which is China’s only hotel operator to make any serious moves outside its home market. Frankly speaking, I’m a bit surprised that state-owned Jin Jiang is leading this particular global expansion campaign, since I would have expected one of the country’s private hotel operators to be at the forefront of this initiative. Read Full Post…
