Europe’s largest hotel operator, Accor, has agreed to a deal to buy FRHI Holdings – the company that owns hotel brands Fairmont, Swissotel and Raffles – in a deal worth about US$2.9 billion (S$4.1 billion) in cash and shares.
FRHI is jointly owned by the Qatar Investment Authority (QIA), Kingdom Holding Company of Saudi Arabia and Oxford Properties, the real estate division of the Ontario Municipal Employees Retirement System.
Paris-based Accor will pay US$840 million in cash for the deal, and issue 46.7 million Accor shares via a reserved capital increase, subject to the approval of shareholders at an extraordinary shareholders’ meeting. The transaction is also subject to regulatory approval by antitrust authorities, said Accor in a press release on Dec 9 (Wednesday).
QIA and Kingdom Holding will each retain minority stakes and have representatives on Accor’s board of directors.
FRHI includes three global luxury hotel brands: Raffles, Fairmont and Swissôtel. It has 155 hotels and resorts – of which 40 are under development – and more than 56,000 rooms, about 13,000 of which are under development. Its portfolio includes Raffles Singapore, The Savoy in London, Shanghai’s Fairmont Peace Hotel, The Plaza Hotel in New York, Le Royal Monceau – Raffles Paris, and Swissôtel The Stamford in Singapore.
FRHI has more than 45,000 employees under its brands, which span 34 countries in five continents.
Accor said it aims to generate around €65 million (S$100 million) in revenue and cost synergies from the combination of brands, the maximisation of hotel earnings, the increased efficiency of marketing, sales and distribution channel initiatives, and the optimisation of support costs. “Significant improvements” will also be made in terms of customer data, said Accor, with the integration of a customer base including 3 million loyalty members, 75 per cent of whom are in North America.
“This is an outstanding opportunity to add three prestigious brands – Fairmont, Raffles and Swissôtel – to our portfolio, and a great step forward for AccorHotels. It offers us robust and global leadership in luxury hotels, a key segment in terms of geographic reach, growth potential and profitability, for long term value creation,” said Accor Chairman and Chief Executive Sebastien Bazin.
Source : Channel NewsAsia – 10 Dec 2015