update

Mulpha still only offering 85c which is a joke.

still expecting GHG to go over $1, but needs a catalyst. expect Mulpha to offer more, or another bidder to arrive.

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AdvertisementMULPHA, which is making a $220 million bid for the Grand Hotel Group, has said in its supplementary bidder's statement issued yesterday, that it could leave the hotel owner as a listed entity.

The group said in the statement that "in the event that Mulpha obtains more than 60 per cent of GHG, Mulpha will use its reasonable endeavours to ensure GHG maintains its listing on the Australian Stock Exchange for at least 12 months of the offer period," the statement says.

However Mulpha has not stated any intention to lift its current price of 85c a GHG security. The price has been said to be too low by some GHG directors.

Mulpha launched the offer on August 18 when investment bank Babcoc & Brown sold its 14.99 per cent stake in GHG.

GHG owns four of Hyatt International's eight Australian properties including the Grand Hyatt Melbourne, Hyatt Regency Adelaide and Hyatt Regency Perth. GHG also owns two Chifley hotels in Brisbane and Canberra and the Country Comfort chain.

Babcoc & Brown bought its stake in 2004 and considered bundling the assets with sites at Darling Harbour such as the Novotel, Grand Mercure and Hotel Ibis, managed by Accor Australia.

In a note following the takeover announcement Deutsche Bank said: "In our view, this effectively provides BNB with an exit mechanism from GHG after unsuccessfully trying to implement new strategic initiatives.

"Our valuation and price target for GHG of 92c per security (fundamental valuation) remains unchanged. Given the corporate activity surrounding GHG, we believe it is a trading buy and 85c per security will represent a floor price in the interim. "Furthermore, we cannot rule out the potential for a rival bid, although the possibility is not high in our view. Given the disconnect between the offer price and net tangible assets, we believe a larger premium will need to be offered to gain control. We recommend GHG shareholders wait."

GHG last week issued its annual results showing revenue growth of $24.4 million on a like-for-like basis, with $17.2 million of that from Hyatt hotels.

The net tangible assets backing per security rose from $1.06 to $1.33 as GHG's portfolio was revalued.