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Depending on objectives and timeframe, I disagree with the author that it is better to invest in JMH over MOI. But I do agree that only JMH shareholders will be able to capture full value.
The 3.35usd offer is 0.98x adjusted NAV (ending Jun2025). Unfortunately, the detailed calculation for adjusted NAV is not readily available. The offer document has indicated as below (in italics):
The Mandarin Oriental Transaction Committee, which has been so advised by Morgan Stanley Asia Limited as to the financial terms of the Acquisition, considers the terms of the Acquisition to be fair and reasonable insofar as Independent Mandarin Oriental Shareholders are concerned. In providing its financial advice, Morgan Stanley Asia Limited has relied upon the commercial assessment of the Mandarin Oriental Transaction Committee.
Fundamental value of Mandarin Oriental: the Transaction Committee has also cross-checked the value of Mandarin Oriental on a fundamental basis, taking into account the value of One Causeway Bay (including the sale price pursuant to the OCB Sale and the floors retained by Mandarin Oriental following the OCB Sale), the value of the hotels owned by Mandarin Oriental and the value of Mandarin Oriental’s hotel management business, which have been fairly reflected in the Total Value and the Scheme Value
We could reasonably assume that the hotels' fair value has been reflected in the adjusted NAV. Office rental reversions continue to stay negative and so we can expect One Causeway Bay's valuation to keep getting lower. As such, after transaction costs and gain taxes, the offer price of 3.35usd may actually be a (slight) premium to the adjusted NAV by the time it completes in 1H26
From MOI's balance sheet (non adjusted) in terms of the hotel mgt business, the adjusted NAV has partially captured it as there are "intangible assets" where related expenses are capitalized (rather than expensed). But I suspect the intangible brand name of Mandarin Oriental (built through expensing advert/marketing/staff training etc) is probably missing. Therefore, this intangible brand name is probably the gap to the full value, where JMH shareholders will enjoy over MOI OPMIs.
Mandarin Oriental acquisition bid shows it’s better to invest in Jardine Matheson
Analysts say proposed buyout undervalues Mandarin Oriental International significantly
One Causeway Bay’s partial divestment at US$925 million will net US$758 million in proceeds, which will be distributed to Mandarin Oriental International shareholders as special dividend at US$0.60 a share. The Citi analysts said that the cash dividend to be paid to Jardine Matheson will amount to about US$667.6 million, more than the US$415.5 million required for it to privatise Mandarin Oriental International and with US$252.1 million to pocket.
On a per share valuation, adjusted net assets value – which took into account the fair value of investment properties and market value of the group’s freehold and leasehold interest – was US$3.42, or 2 per cent higher than the offer price and special dividend of US$3.35.
https://www.businesstimes.com.sg/opinion...e-matheson
The 3.35usd offer is 0.98x adjusted NAV (ending Jun2025). Unfortunately, the detailed calculation for adjusted NAV is not readily available. The offer document has indicated as below (in italics):
The Mandarin Oriental Transaction Committee, which has been so advised by Morgan Stanley Asia Limited as to the financial terms of the Acquisition, considers the terms of the Acquisition to be fair and reasonable insofar as Independent Mandarin Oriental Shareholders are concerned. In providing its financial advice, Morgan Stanley Asia Limited has relied upon the commercial assessment of the Mandarin Oriental Transaction Committee.
Fundamental value of Mandarin Oriental: the Transaction Committee has also cross-checked the value of Mandarin Oriental on a fundamental basis, taking into account the value of One Causeway Bay (including the sale price pursuant to the OCB Sale and the floors retained by Mandarin Oriental following the OCB Sale), the value of the hotels owned by Mandarin Oriental and the value of Mandarin Oriental’s hotel management business, which have been fairly reflected in the Total Value and the Scheme Value
We could reasonably assume that the hotels' fair value has been reflected in the adjusted NAV. Office rental reversions continue to stay negative and so we can expect One Causeway Bay's valuation to keep getting lower. As such, after transaction costs and gain taxes, the offer price of 3.35usd may actually be a (slight) premium to the adjusted NAV by the time it completes in 1H26
From MOI's balance sheet (non adjusted) in terms of the hotel mgt business, the adjusted NAV has partially captured it as there are "intangible assets" where related expenses are capitalized (rather than expensed). But I suspect the intangible brand name of Mandarin Oriental (built through expensing advert/marketing/staff training etc) is probably missing. Therefore, this intangible brand name is probably the gap to the full value, where JMH shareholders will enjoy over MOI OPMIs.
Mandarin Oriental acquisition bid shows it’s better to invest in Jardine Matheson
Analysts say proposed buyout undervalues Mandarin Oriental International significantly
One Causeway Bay’s partial divestment at US$925 million will net US$758 million in proceeds, which will be distributed to Mandarin Oriental International shareholders as special dividend at US$0.60 a share. The Citi analysts said that the cash dividend to be paid to Jardine Matheson will amount to about US$667.6 million, more than the US$415.5 million required for it to privatise Mandarin Oriental International and with US$252.1 million to pocket.
On a per share valuation, adjusted net assets value – which took into account the fair value of investment properties and market value of the group’s freehold and leasehold interest – was US$3.42, or 2 per cent higher than the offer price and special dividend of US$3.35.
https://www.businesstimes.com.sg/opinion...e-matheson
I am not a certified financial advisor and so nothing of what I say should be construed as financial advice. Please consult a certified financial advisor for advice instead.