Abu Dhabi could buy luxury Mayfair hotels from Barclay brothers

This article titled “Abu Dhabi could buy luxury Mayfair hotels from Barclay brothers” was written by Simon Bowers, for The Guardian on Sunday 1st March 2015 16.44 UTC

Abu Dhabi’s leading sovereign wealth fund has indicated it wants to buy three of Mayfair’s top hotels — Claridge’s, the Berkeley and the Connaught — for £1.6bn.

The Abu Dhabi Investment Authority (ADIA) is understood to have written to the board of Coroin, the company behind the hotels, signalling its takeover ambitions.

The prized hotels are currently controlled by the Barclay brothers, owners of the Telegraph newspapers, after their clever — but controversial — corporate raid on the business four years ago.

Meanwhile, long-standing minority shareholder Paddy McKillen, who has 37% of Coroin shares, has also recently indicated he wants to buy out others shareholders and own the business in its entirety.

While the Barclays control almost two-thirds of Coroin voting rights, McKillen believes complex legal agreements between the shareholders effectively weaken the brothers’ hand when it comes to considering a takeover approach.

McKillen on Sunday said: “It looks like the Barclays are fortunate to have ADIA and me interested in buying their interests”. He has said he has no intention of selling but is “willing to engage with any new partner”.

In December it was reported that Dubai investment group Al Habtoor had ended talks with the Barclays about acquiring the Mayfair hotels. Khalaf al Habtoor is said to have been frustrated that the sale talks had dragged on for months before the brothers abruptly indicated they would not sell.

In 2011 the Barclays launched an audacious raid on the hotel businesses, seizing control of almost two-thirds of voting rights in holding company Coroin. But the brothers’ ambitions to force out McKillen, the final minority shareholder, were then thwarted.

McKillen launched a string of court actions against the brothers that have cost him millions of pounds in legal fees. He accused them of deploying illegal tactics to win control of two large stakes in Corion, but the allegations were thrown out by the courts.

That left the battle for control in a finely poised stalemate. The Barclays had been able to buy an investment company behind a Coroin stake of almost one-third, but their grip over a further stake of 35% — which had been controlled by distressed Irish property tycoon Derek Quinlan — was far less secure.

The brothers hold the voting rights over Quinlan’s shares, and have an agreement to buy his stake, but they cannot execute that agreement without McKillen first having the opportunity to buy a little over 50% of Quinlan shares, under the terms of a shareholder agreement. That would leave McKillen with a controlling holding.

The latest approach from ADIA, revealed in the Sunday Times, is not the first time Abu Dhabi interests have circled Coroin. In 2011, the Barclays are known to have discussed launching a joint takeover of the business with representatives of Sheikh Mansour, owner of Manchester City football club.

Meanwhile, as long ago as 2010 McKillen had been exploring a possible sale of the business with those representing the Al-Thani ruling family of Qatar. He kept in touch with Qatar for several years and Qatari interests later provided financial support for his participation in a Coroin rights issue in 2012. Without that support, the Barclays would have gained outright control of the company.

The Coroin hotels are popular with some of the wealthiest of the Middle-Eastern super-rich. Until 2004 the group had also included the Savoy hotel on the Strand but that property was sold to Saudi Arabia’s Prince Alwaleed bin Talal.

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