Morgans Hotel Group Co. (NASDAQ:MHGC) has confirmed that it has received a revised unsolicited takeover offer from ‘bidder V’. In a letter dated September 13, 2016, the bidder intends to acquire the lifestyle hospitality company for $2.75 a share. The unnamed bidder has also submitted a letter indicating a new financing source as well as $500 million that is to be used to support the transaction as capital.
Bidder V Takeover Push
Morgan Hotel board has since adjourned a special shareholders meeting to give stockholders the much-needed time to analyze Bidder V takeover proposal. The board is also taking time to analyze a third party [proposal that has the potential to lead to a much higher bid.
This is not the first time that the unnamed bidder has made a move to acquire Morgan Hotels. In July, the ‘Bidder V’ tabled a preliminary proposal that valued the Hotel at $2.75 per share. In a press release, Morgan Hotel has confirmed that its Board of directors reached out to the bidder after the initial offer encouraging it to execute a non-disclosure and work towards filling a definitive proposal.
Morgans ‘Bidder V’ Concerns
While the takeover news continues to evoke interest on Morgans Hotel stock there are a number of concerns that could deal the takeover a big blow. The lifestyle hospitality company has already raised concerns over the credibility and financial capacity of ‘Bidder V’ to finalize the transaction.
It is also unclear whether the bidder in question will be able to refinance the company’s existing mortgage debt. Failure to address these issues two months after tabling the first offer all but continues to raise serious doubts over the bidder’s ability to consummate the transaction.
While Morgans Hotel Group Co. (NASDAQ:MHGC’) concerns are valid, Bidder V presenting a letter of intent all but increases the probability of the deal coming to fruition. However, shareholders will also have to approve the deal for it to see the light of day.
