Last week, City Developments, the majority owner of UK hotel group Millennium & Copthorne, made a bid to buy the company, which was valued at £1.8 billion. The firm’s independent directors had agreed to recommend the offer, at 552.5 pence in cash for each share.

Not everyone has agreed to the valuation, however: A letter to Millennium’s independent committee of directions from shareholders International Value Advisers and MSD Partners said that the proposal “significantly undervalues” the company. The offer does not reflect a true value of the firm’s assets, the shareholders claimed, and the offer is a 32.5-percent discount on its true value as set out in its accounts rather than its share price.

(Between them, the two firms own an almost 9-percent stake in the company, the Telegraph claims.)

“By recommending the proposed offer, M&C’s non-executive directors are failing in their duty to create maximum value for all shareholders,” the letter said, and called on the directors to have Millennium’s property portfolio independently valued in order to work out what its hotels are worth.

“We have been supportive of the company for a significant time, and would like to understand how you feel your obligations to guide the company through a takeover process are discharged by a recommendation of a wholly derisory proposal.” 

Ned Hammond, an analyst from Berenberg, said the value of the properties could be “well over £5 billion,” but because Millennium has traditionally generated profit from owning its own buildings, it was unlikely to sell anything, making the value immaterial to the offer.

City Developments has pledged not to sell properties in London and New York, accounting for 34.2 percent of the hotel assets by value, but has not made its plan clear for other locations.

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