NEW YORK— Six Continents PLC is pushing ahead with the demerger of its lodging and pubs business, following last month’s overwhelming vote of confidence and approval for the separation. Investors turned out in force at an extraordinary general meeting to trump a multi-billion dollar hostile bid by British entrepreneur Hugh Osmond for the entire U.K.-based company. While several resolutions were passed during the meeting, all eyes were on Resolution 2, the one calling for the separation of 6C and the Mitchells & Butlers share consolidation. Although the resolution passed on a show of hands, proxy votes indicated shareholders voted 436.1 million to 10.2 million for the measure, thus paving the way for the emergence of the two entities: InterContinental Hotels Group PLC (IHG) for the lodging and soft drinks entity that will include more than 3,300 Holiday Inn, InterContinental and Crowne Plaza hotels, and retail unit Mitchells & Butlers PLC (MAB) for the 2,000-unit All Bar One and O’Neill’s pubs business. The resolution’s passage brought to an end at least one bumpy phase for 6C management, which had been fending off Osmond and his initial £5.6 billion ($8.91 billion U.S.) takeover try via bid vehicle Capital Management and Investment (CMI). Although 6C’s board had firmly rejected the bid, right up until the morning of the March 12 meeting Osmond pushed for postponement of the meeting, ostensibly to buy more time for investors to consider his plan; however, by a three-to-one ratio (98,787,457 to 30,690,881), shareholders turned thumbs down on his request for adjournment. According to 6C, this figure did not include proxy votes where the proxy voted in favor of the demerger but was not at the meeting. If such votes were included, this would increase the number of votes against the adjournment resolution by over 365 million. The bid bust reportedly cost Osmond, the founder of pubs group Punch Taverns and ex-owner of PizzaExpress, more than £8 million ($12.9 million U.S.). From the time he launched his bid to the meeting date, the bid price vacillated due to fluctuating share prices of CMI stock, which declined over several days, leaving the bid worth from £4.2 billion ($6.7 billion U.S.) to £3.9 billion ($6.2 billion U.S.). Osmond had offered 36 shares for each 6C share or on a different tact, £1.4 billion ($2.25 billion U.S.) in cash and fewer shares. With the demerger, current shareholders will get 50 IHG shares and 50 MAB shares for every 59 6C shares they hold, plus 81 pence ($1.28 U.S.) per share in cash. Six Continents is slated to return 700 million ( $1.1 billion U.S.) of capital to shareholders by April 23. At presstime, the shares for the new entities were slated to begin conditional trading on April 7. On April 15, the separation is set for completion, at which time unconditional trading will begin. With the split, industry observers feel each entity may now be its own separate target for either friendly or hostile bids. Osmond has reportedly said he would not go after the entire company again, but had not eliminated making an offer for one of the separated units. As previously reported by HOTEL BUSINESS®, the board of 6C said it will “seriously consider” any proposal that might be attractive to shareholders and that has a reasonable prospect of delivery. The board confirmed a process already is established and that it has an independent committee tasked with wrangling the process in respect to approaches or proposals, if any, made for any part of the business, or for 6C as a whole prior to the demerger. This may find more aggressive tactics by those mentioned as supposedly interested in bidding for 6C. Companies floated included U.K.-based private equity group CVC Capital Partners Ltd., which reportedly looked to team with either Starwood Hotels & Resorts Worldwide or Marriott International, in a friendly bid for 6C to stave off Osmond, according to The Wall Street Journal; and U.S.-based private equity
