Abu Dhabi fund in $2.5bn bid for London hotels

Abu Dhabi’s sovereign wealth fund has launched a US $2.5 billion takeover bid for Maybourne Hotel Group, owner of luxury London hotels Claridge’s, the Berkeley and the Connaught.

According to a report in the Sunday Times, Abu Dhabi Investment Authority (ADIA) has sent a letter declaring interest in Maybourne’s holding company Coroin. If the bid is successful, it would put an end to a four-year dispute over ownership of the five-star hotel portfolio.

In 2011, the billionaire Barclay brothers made an attempt to wrestle control of Maybourne from Irish property investor Paddy McKillen by unsuccessfully attempting to acquire around 64% of of Coroin through a complex investment strategy that involved buying the holding companies that owned the shares in the business rather than the shares themselves.

McKillen launched several legal proceedings against the Barclay brothers in London and Dublin, some of which are still working their way through the courts. As it stands, McKillen owns 37% of Coroin, while fellow Irish investor Derek Quinlan holds a 35% stake. However, Quinlan has set up an arrangement with the Barclays whereby they control his voting rights on the board, in addition to the 28% stake held by a company they own named Misland.

A successful takeover of Maybourne by ADIA would also be the latest in a string of Gulf direct investments in prime London assets that totalled US $3 billion last year, Arabian Business reported last week.

ADIA already owns the five-star Lanesborough in Knightsbridge and bought more than 40 regional Marriott hotels from Royal Bank of Scotland two years ago.

A source told the Sunday Times that the sovereign wealth fund has been circling Maybourne for some time.

“The price is reasonable,” the source said. “[The Abu Dhabi fund] is just trying to see where the land lies with the shareholders because there’s no love lost between the Barclays and McKillen. It has given everyone something to think about.”

The newspaper said ADIA is understood to be willing to settle for a majority stake in Maybourne, with McKillen retaining a minority interest.

McKillen’s spokesman reportedly said: “[McKillen] has no intention of selling his shareholding in Maybourne. He is, however, willing to engage with any potential new partner.”

Maybourne Hotel Group declined to comment when contacted by Arabian Business, a sister publication of Hotelier Middle East.