Last updated: 03:10 PM ET, Wed December 09 2015

AccorHotels to Acquire FRHI in $2.9 Billion Deal

Hotel & Resort | Patrick Clarke | December 09, 2015

AccorHotels to Acquire FRHI in $2.9 Billion Deal

PHOTO: The Novotel Lombok, part of the AccorHotels group. (Courtesy of AccorHotels)

Europe's largest hotel group, AccorHotels is set to acquire FRHI Holdings Ltd. in a cash-and-share deal valued at $2.9 billion, the group announced Wednesday.

FRHI (Fairmont Raffles Hotels International) operates the Fairmont, Raffles and Swissotel luxury hotel brands comprising 115 existing hotels and resorts boasting a combined 43,000 rooms.

AccorHotels will purchase FRHI from the Qatar Investment Authority (QIA) for $840 million in cash and the issuance of 46.7 million new shares.

In a statement, Accor chairman and CEO Sebastien Bazin said the deal "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."

"In addition, the deal allows us to strengthen our human capital with FRHI's widely respected and talented global workforce which has a proven track record in operating and marketing luxury hotels," he added. "This major acquisition demonstrates the Group's agility in a fast-changing industry and will allow us to more effectively support our guests, clients and hotel owners. Through it, we are positioning ourselves as a key player in the current industry consolidation process while maintaining substantial leeway to implement our transformation plan."

A majority of the hotels are operated under long-term management contracts, six hotels are leased and one is owned.

Meanwhile, another 40 hotels with a combined 13,000 rooms are currently under development.

With the properties spanning nearly three dozen different countries across five different continents, the deal provides AccorHotels with an excellent platform for expansion. Keep in mind that 42 of the acquired properties are located in North America, meaning the deal boosts the group's profile in the U.S.

"Since making our investment, Fairmont Raffles Hotels International has become a leading luxury hotel company with an expanded international presence," said QIA CEO Sheikh Abdulla Bin Mohammed Bin Saud Al-Thani. "This deal generates the scale needed to drive the next phase of growth in our real estate and hospitality investments. QIA has confidence in AccorHotels and looks forward to becoming a significant shareholder."

The deal is pending shareholder approval but a meeting is scheduled for the second half of 2016.


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