Reliance Industries Limited to acquire Mandarin Oriental New York

Reliance Industries Limited is acquiring Mandarin Oriental, a luxury hotel in New York, for $98.15 million, or Rs 7,294 crore.

The oil-to-telecom conglomerate announced late on Saturday that Reliance Industrial Investments and Holdings Ltd (RIIHL) will acquire the entire issued share capital of Columbus Centre Corporation (Cayman), a Cayman Islands incorporated company, which holds 73.37 percent in the hotel.

Set up in 2003, Mandarin Oriental New York — a 248-room and suites property — is located at 80 Columbus Circle, adjacent to Central Park and Columbus Circle. It posted revenues of $115 million in 2018, $113 million in 2019, and $15 million in 2020.

Reliance said the acquisition would expand the group’s consumer and hospitality portfolio The Mukesh D Ambani giant is not new to this segment as it had checked into EIH Ltd, which is based out of Calcutta, in 2010 by acquiring a little over 14 percent in the company. I run The Oberoi Grand, Calcutta.

Group company Reliance Strategic Business Ventures Ltd subsequently hiked its stake in the hospitality firm and it currently holds around 18.83 percent in EIH.

The second major transaction came in April last year when RIIHL acquired the entire issued share capital of Stoke Park Ltd — a country club and luxury golf resort in the UK — for £57 million (Rs 592 crore).

Stoke Park owns and manages sporting and leisure facilities at Stoke Poges, Buckinghamshire. The facilities included a hotel, conference facilities, sports facilities, and one of the highest-rated golf courses in Europe.

Back home, Reliance is developing a convention center, hotel, and managed residences in BKC Mumbai.

A statement from RIL said that the closing of the transaction for Mandarin Oriental is anticipated to occur by the end of March 2022 and is subject to certain customary regulatory and other approvals and the satisfaction of certain other conditions.

The statement said in the event the other owners of the hotel elect to participate in the sale transaction, RIIHL would acquire the remaining 26.63 percent, based on the same valuation used for the acquisition of the indirect 73.37 percent stake.

Mayer Brown LLP acted as legal counsel for Reliance on the transaction.

The acquisition comes at a time the global hospitality industry is looking at a revival after the pandemic badly hurt its business. However, with the Omicron virus causing a spike in Covid-19 cases globally, the sector may have to wait for some more time before returning back to the pre-pandemic growth levels.

Pandemic worry

Although the Mandarin Oriental reopened on April 1 last year, it’s been hit like other leading hotels by the lack of high-spending visitors and business travelers from abroad.

The hotel occupies floors 35-54 of Columbus Centre and is known for its much-in-demand ballroom, a five-star spa, and eating and drinking venues, including MO Lounge.

Bond locale

The Stoke Park facility is an iconic locale that’s been the setting for two James Bond films. Stoke Park owns and manages a 49 luxury bedroom and suites hotel, 27-hotel championship golf course, 13 tennis courts, and 14 acres of private gardens in Buckinghamshire. Since James Bond played a game with Auric Goldfinger there in the 1964 blockbuster, the estate with the Georgian-era mansion set amid 300 acres of parkland has been a backdrop in productions such as Bridget Jones’s Diary and Netflix’s British royal family drama The Crown.

RIL shares closed at Rs 2,435.95 on the BSE on Friday — a gain of 0.80 percent. Earlier the company announced that its retail arm led a $240 million investment in quick commerce startup Dunzo.

Ambani is helming a transformation as he seeks to build the digital and retail business into equal-sized pillars for Reliance, paring dependence on profits from its traditional oil refining business.

Over the past five years, Reliance has announced $5.7 billion in acquisitions with 45 percent in TMT and 23.6 percent in new energy