HNA’s Spanish troubles a lesson for all Chinese firms going global
An ongoing drama in the board room of a Spanish company that has seen the overthrow of its co-chairman and three directors appointed by Chinese shareholder HNA Group signals a new kind of challenge faced by Chinese companies seeking to go global through aggressive mergers and acquisitions while sticking to a Chinese style of management control.
The odd situation that has left mainland aviation and property conglomerate HNA stripped of board representation at Spain’s NH Hotel Group – where it remains the largest shareholder with a 29.5 per cent stake – comes after 60 per cent of NH shareholders last week voted out three directors appointed by HNA including former company co-chairman and chairman of the board Charles Bromwell Mobus, while chief executive Federico González Tejera was removed from his company directorship at a later board meeting.
NH’s second largest shareholder Oceanwood Capital, a British private fund, motioned the vote because it considered HNA’s pending acquisition of the Carlson-Rezidor hotel group a “conflict of interest”. HNA in April agreed to buy Carlson Hotels, which owns the Radisson chain and a majority stake in Brussels-based Rezidor Hotel Group, for an undisclosed sum.
The “dramatic turn of events” is a result of the Chinese conglomerate being too acquisitive in recent months and could be the start of more troubles to come, said Michel Brekelmans, co-head of LEK Consulting in China.
“HNA is a particularly active M&A player, closing a new deal almost every other week. Globally, there are probably few other groups that close the number of scaled deals that HNA has in the past 2 years,” he said. “Perhaps in this flurry of activity they didn’t have a chance to properly work things through with all the relevant stakeholders. Since many of their deals are minority investments they will have an increasingly complex and challenging task in meeting the expectations and investment needs across all the constituents, both fellow shareholders and management teams, across their ever expanding portfolio,” he said.
Globally, there are probably few other groups that close the number of scaled deals that HNA has in the past 2 years
HNA said in a statement that it was disappointed in the NH development as it had “rescued NH Hotel Group from the brink of failure by providing a necessary capital infusion three years ago”. It said it would “continue to be an active shareholder” and “not be coerced into launching a tender offer”.
