CDL Hotels International has proposed a S$327.42 million (about HK$1.58 billion) merger for its hotel operations in Singapore.
The plan will involve a new issue and a rights issue by the group's Singapore-listed subsidiary King's Hotel to finance the acquisition of City Hotels.
King's Hotel is 67.99 per cent owned by CDL, while City Hotels, wholly owned by CDL, is the owner and operator of the Orchard Hotel in Singapore.
CDL said the merger represented a further development in the group, and was part of its efforts to have distinct international hotel vehicles at the locations of each of its hotels.
The price paid by King's Hotel for City Hotels represents a 15 per cent discount to the latter's net tangible asset value.
King's Hotel intends to finance at least 90 per cent of the $327.42 million consideration through an issue of 168.38 million new shares at $1.75 each. The new shares represent 200 per cent of its existing share capital.
The issue price represents a 27.7 per cent discount to last Friday's closing price of $2.42 on the Singapore stock exchange.