Finally, a good core business for BIL International
By Mano Sabnani, Business and Financial Consultant
First published in TODAY
15-16 Mar 2003

Meanwhile, BIL International, formerly Brierley Investments, is moving to secure a tight grip on the Thistle Hotels chain based in London. It has offered 115 pence per share for the remaining 54 per cent of Thistle it does not already own, but the offer has been rejected by management on grounds of undervaluation of assets.

However, BIL has a good chance of succeeding in its hostile takeover,
considering that the Thistle group has seen consolidated profit from its 56
four-star hotels decline by one third to only 30.9 million pounds for the year
to December 2002. Thistle management's argument is that the underlying NTA per share is much higher than 115 pence while BIL says the focus should be on earnings and that its offer is priced at a respectable 22 times net earnings.

BIL's trump card is that it already owns 46 per cent of Thistle and that two Singapore government companies, GIC and Temasek, own about 19 per cent of the hotel group and may want to sell or accept the offer. That would give BIL 65 per cent of Thistle, a comfortable majority. BIL's offer document will be sent to shareholders within 28 days of March 4, when it made its offer.

For BIL, the takeover of Thistle is significant in that it gives the group a core business and rids it of the image of being an investment holding company. BIL earlier had a sizeable stake in Air New Zealand, now whittled down to only 7.85 per cent due to Air NZ's earlier well-publicised problems and restructuring. BIL also retains about 5 per cent of food, beverage, publications and property conglomerate, Fraser and Neave.

BIL is indirectly controlled by Malaysian tycoon Quek Leng Chan who also owns GuocoLand (formerly First Capital Corporation) in Singapore and Hong Leong Properties in Malaysia. Mr Quek may have plans to further rationalise his property interests and Thistle Hotels could be a key part of that process.