China's HNA drops bid for Spain's NH hotels: company
Chinese airline group HNA has abandoned its purchase of a 20-percent stake in Spanish hotel chain NH because of financial market turbulence, the Spanish company said on Tuesday.
"Faced with the volatility and uncertainty of the current financial situation, HNA has decided not to begin executing the investment agreement according to the agreed calendar," NH said in a statement to the Madrid stock exchange.
"Yesterday the board of NH Hotels agreed to terminate the investment agreement," with HNA paying the Spanish firm $15 million (11 million euros) in compensation for breaking the deal, it added.
NH said the companies left open the possibility of resuming the merger, under which they would jointly set up hotels in China and channel passengers on HNA's airlines to NH Hotels.
"HNA has confirmed its intention to continue conversations with NH Hotels Group in order to reach a possible strategic alliance between the two groups" along these lines, the statement said.
NH is Europe's third-biggest business hotel chain. HNA is China's fourth-biggest airline group, owner of Hainan Airlines and a big stake in Hong Kong Airlines.
The deal was struck in May but in October NH was forced to drop the price of the stake from 431.6 million euros to 329.8 million euros (from $570 million to $435 million), citing stock market declines during the eurozone debt crisis.
After Monday's announcement NH shares plunged 10.25 percent on the Madrid stock exchange in early trading.
China is one of the world's fastest-growing tourism markets and overtook Spain last year as the world's third most visited country, according to figures from the UN World Tourism Organisation.
© 2011 AFP