Radisson Hospitality: Attractive Special Situation due to New Majority Owner

Brad Hathaway of Far View Capital Management presented his in-depth investment thesis on Radisson Hospitality (Sweden: RADH) at European Investing Summit 2018.

Thesis Summary:

Radisson Hospitality is an operator, manager, and franchisor of Radisson-branded hotels in Europe, Middle East, and Africa. The stock suffered from a significant overhang as a result of the financial troubles of its 70%-owner, distressed Chinese conglomerate HNA.

In August, HNA agreed to sell its 70% stake to Jin Jiang, a Chinese company that is the fifth-largest hotel company in the world. As a result of the sale, Jin Jiang is obligated under Swedish law to bid for the remaining 30% public ownership at a price of at least SEK 35 per share.

However, for Jin Jiang to take the remainder of RADH private, they will likely have to offer a much higher price in order to achieve the 90% threshold required to squeeze out the remaining minority owners.

At 8-9x EBITDA, which Brad believes remains a discount to fair value, Brad estimates RADH to be worth ~SEK 50-57 per share. Jin Jiang’s acquisition of European hotel chain Groupe Du Louvre took place at 12+x EBITDA, implying a stock price of more than SEK 77 per share.

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About the instructor:

Brad Hathaway is the Managing Partner of Far View Capital Management. Before founding Far View Capital Management in 2011, Mr. Hathaway worked for four years at J. Goldman & Company, a New York City-based hedge fund. At J. Goldman, Mr. Hathaway worked as an analyst and a portfolio manager on the firm’s value team. His role there included sourcing and analyzing investment opportunities and managing a portfolio comprised of global securities from multiple asset classes with a focus on US publicly-traded equities. Prior to J. Goldman, Mr. Hathaway worked for three years as an analyst at Tocqueville Asset Management where he discovered and researched global long and short equity investments for the International Value mutual fund and the Global Partners hedge fund. Mr. Hathaway graduated with a B.A. in Political Science from Yale University.