Several of you may have seen the article in the Times today that speculates on a bid approach for Elegant Hotels pitched at around 110p from Melia Hotels, an international Spanish hotelier. Currently the share price is 83.5p. The implied net asset value at the interim results in June was 175p and the current tangible book value is somewhere in excess of 100p. Although NAV depends very much on the sterling dollar exchange rate and which brokers figures you look at.

The company floated in May 2015, in which time the share price has only briefly exceeded the float price of 100p, but has paid out handsome dividends

Given the low valuation a bid approach would not be a surprise and is one of several reasons why I hold the shares. Luke Johnson who is a non executive director holds 12% of the company. Should a bid materialise I am not sure that 110p will be sufficient and I cannot see Luke Johnson supporting a bid that does not recognise the value of the company. Off course this may all turn out to be a storm in a tea cup, but I would suggest that there is no smoke without the proverbial fire.

Thoughts and comments welcome.

All the best


Jonno

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