SWITZERLAND/CHINA. The Swiss Takeover Board (TOB) has called on HNA Group to clarify details of its ownership structure in light of its takeover of inflight services specialist gategroup, after questions were raised in a report by the Financial Times on 25 July.
HNA’s aggressive acquisitive strategy, ownership structure and financing have come under intense scrutiny and been the subject of much media comment in recent weeks. The company has invested $40 billion overseas over the past three years, including the completed takeover of gategroup in December 2016. The Swiss group’s shares were delisted from the Six Swiss Exchange on 27 April. HNA followed this by taking a 20.92% stake in travel retail giant Dufry, which was completed in August.
The FT article titled “HNA chief shrugging off regulatory and ownership concerns” focused on the revelation on 24 May that HNA had transferred ownership of almost 30% of its business away from Chinese shareholder Guan Jun to a US foundation formed in 2016 – the Hainan Cihang Charity Foundation. Jun had acquired the 29.5% stake from Hong Kong businessman Bharat Bhise last year.
The TOB Federal Commission seeks clarification from HNA regarding its ownership between 20 May 2016 – the official announcement of its intentions to acquire gategroup – and 24 July 2017.
HNA Group CEO Tan Xiangdong (Adam Tan) is quoted in the FT, saying: “The [29.5%] stake is our [HNA’s] own stake. For the whole time. They [Guan and Bhisé] had just held the stake for us. That’s why I can move the shares.”
TOB President Thomas Müller has called on HNA Group to answer the following questions within two weeks:
- The exact date, type of acquisition, at what price and by whom were HNA Group holdings acquired based on the article dated 24 July 2017 (with the exception of Hainan Province Cihang Foundation)
- According to the statement from Tan Xiangdong cited above, Bharat Bhisé and Jun Guan held their respective holdings in the HNA Group in trustee form. Explain this statement from Tan Xiangdong and clarify for whom Jun Guan and Bharat Bhisé held the relevant holdings.
TOB has also asked for clarification on HNA’s Group’s disclosure on the roles and voting rights of its three co-founders: Chen Feng, Wang Jian and Chen Wenli, who were not mentioned as shareholders during the acquisition of gategroup.
HNA’S ACQUISITION TRAIL
In December last year, HNA took the final step in its acquisition of gategroup paying the offer price of CHF53 per share to gategroup shareholders, after it had announced an all-cash offer in April. On a fully diluted basis, the offer price valued gategroup at approximately CHF1.4 billion (US$1.47 billion).
The deal represented another major consolidation in the aviation services industry as gategroup had just acquired Scandinavian travel retailer Inflight Service Group, boosting the Swiss company’s already strong presence in the inflight and wider travel retail and onboard sectors.
For HNA, the deal was another marker in an acquisitive run across its fields of interest with aviation and aviation-related services central to the expansion:
- April 2017: Dufry notified of by HNA Group that it purchased 16.79% of the Swiss travel retail giant’s shares
- December 2016: As reported, HNA completes acquisition of gategroup, the Swiss inflight services provider, in a transaction valued at CHF1.4 billion (US$1.47 billion).
- December 2016: Completes acquisition of IT products and services company Ingram Micro through subsidiary Tianjin Tianhai Investment Company. The all-cash transaction is for US$38.90 per share with an equity value of approximately US$6 billion.
- December 2016: Closes deal to acquire Carlson Hotels through subsidiary HNA Tourism Group. Also acquires Carlson’s 51.3% stake in Brussels-based Rezidor Hotel Group.
- October 2016: China Duty Free Group parent company China International Travel Service votes at its board meeting on 28 October to create a joint venturewith Hainan Duty Free.
- October 2016: Announces intention to purchase a quarter of Hilton Worldwide Holdings Inc. for US$6.5 billion.
- October 2016: Buys CIT Group’s aircraft leasing business for US$10 billion.
- May 2016: Agrees to purchase 13% of Virgin Australia for US$114 million, with plans to raise that stake to about 20%.
- March 2016: Increases stake in Deutsche Bank from 3.04% to 4.76%.
- March 2016: Acquires Manhattan’s 245 Park Avenue skyscraper for US$2.21 billion.
- November 2015: Agrees to buy 23.7% stake in Azul Brazilian Airlines for US$450 million through subsidiary Hainan Airlines.
- July 2015: Agrees to buy airport luggage handler Swissport International from PAI Partners for US$2.81 billion.
