Europe: Six continents' split-up creates two new ADRs

Global Finance, Jun 2003

Two new American depositary receipt programs were created in April as a result of the separation of Six Continents, the world's largest hotel group, into two companies. Bank of New York was selected as depositary for both programs.

London-based Six Continents split its hotels and soft-drinks businesses from its pub and restaurants operations after shareholders voted overwhelmingly to reject an $8.8 billion hostile takeover bid by food and drinks entrepreneur Hugh Osmond.

Six Continents separated into Intercontinental hotels and Mitchells & Butlers, both of which are listed on the London Stock Exchange. The latter operates 2,100 pubs, bars and restaurants throughout the UK.

Birmingham-based Mitchells & Butlers has developed a major portfolio in the pub industry by creating a series of its own brands, including Vintage Inns, Toby CarveryAll Bar One, O'Neill's, Scream and Ember Inns, and through acquiring such brands as Harvester, Browns, and Alex.

Each Mitchells & Butler ADR represents one ordinary share and trades on the New York Stock Exchange.

Similarly, each Intercontinental Hotels ADR represents one London-listed ordinary share and trades on the NYSE. The hotel company's businesses include Intercontinental Hotels and Resorts, Crowne Plaza Hotels and Resorts, Holiday Inn, Express by Holiday Inn and Staybridge Suites.

Intercontinental Hotels also holds a controlling interest in Britvic, which has the exclusive rights in the UK to the Pepsi and 7 UP brands. Britvic's own brands include Robinsons, Tango and Britvic.

Shareholders received 50 shares each of Intercontinental and Mitchells & Butlers for every 59 shares of Six Continents.The company also distributed a total of about $1.1 billion to Six Continents' shareholders.

Osmond's investment vehicle, Capital Management & Investment, had planned to release funds for shareholders through a series of sale and lease-back deals on Six Continents' pubs. It also had lined up buyers for some of Six Continents' hotels. The board of Six Continents turned down Osmond's offer, saying the proposal "gives shareholders nothing they did not already own except significant risk."