Hotel Ivory Case Solution

Moreover, the hotel itself was recognizing the value and opportunity of the property. Therefore, he was keen to make an acquisition of the hotel and materialize the value through subsequent restructuring. In this regard, Sanankoua may not allow Asdar Capital to squeeze him if they agree to do the deal.

2. If Asdar Capital is not interested in the acquisition of the Hotel Ivory, there may be very limited options for Sanankoua to execute the acquisition of this deal. As mentioned in the case, the local debt market was not much sophisticated, and was extremely difficult to raise debt. The local debt would cost around 12-18%, therefore, will be extremely expensive for Sanankoua to execute the transaction through debt. The local private equity industry in Africa has seen rapid growth in the recent year and may be a potential candidate to make an investment in the hotel. Sanankoua through his network at Harvard may have a good relationship with the African private equity community. Therefore, it may be a good source of funds if Sanankoua is able to coney the value creation opportunity in the hotel.

3. There may not be much option available to Sanankoua after the end of the exclusivity period. The existing owners have already received an offer from a wealthy Lebanese businessman with more favourable terms as compared to the contract with Sanankoua. The break-up fee clause in the contract with Sanankoua is only forcing the existing owners to not sell the hotel to the Lebanese Businessman.