Accorhotels has announced the signing of an agreement with Qatar Investment Authority (QIA), Kingdom Holding Company (KHC) of Saudi Arabia and Oxford Properties, an Ontario Municipal Employees Retirement System (OMERS) company forthe acquisition of FRHI Holdings Ltd (FRHI), parent of Fairmont, Raffles, and Swissôtel.
FRHI includes three of the most prestigious global luxury brands: Raffles, Fairmont and Swissôtel. It includes 155 hotels and resorts (40 of which are under development), and more than 56,000 rooms (13,000 of which are under development). The portfolio includes prominent properties such as The Savoy in London and Le Royal Monceau Raffles Paris.
FRHI’s hotels and resorts span 34 countries across five continents, with 26 in Europe. The majority of the hotels (108) are operated under long-term management contracts, with average remaining terms of nearly 30 years; six hotels are leased and one hotel is owned.
The acquisition will strategically enhance Accorhotels’ brand portfolio, providing Accorhotels with a better-balanced business profile. The integration of Raffles, Fairmont and Swissôtel will broaden the Group’s geographic footprint in the luxury segment, and enable it to optimize its luxury and upscale brands in order to adapt its offering to the expectations of an increasingly demanding clientele.
“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. 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. The transaction will also enable the Group to consolidate its shareholder base, with the arrival of two high-profile investors that both have extensive expertise in the hospitality industry. 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,” said Sébastien Bazin, chairman and chief executive officer of AccorHotels.
The agreement with Qatar Investment Authority and Kingdom Holding Company of Saudi Arabia provides for the cash payment of $840 million (€768 million at the current exchange rate) and the issuance of 46.7 million Accor shares. These shares will be issued via a reserved capital increase, subject to the approval of shareholders at an Extraordinary Shareholders’ Meeting. The transaction will leave QIA and KHC respective stakes of 10.5% and 5.8% in Accor’s share capital. Two representatives of QIA and one representative of KHC will be appointed to the Accor Board of Directors.*
This transaction is subject to the regulatory approvals of the antitrust authorities. Rothschild and Zaoui & Co are acting as financial advisors and Darrois Villey Maillot Brochier and Proskauer Rose LLP are acting as legal advisors to AccorHotels on this transaction. Deutsche Bank Securities Inc. and Morgan Stanley & Co. LLC are acting as financial advisors and McCarthy Tetrault LLP and White & Case LLP are acting as legal advisors to FRHI on this transaction.
* Subject to the approval of shareholders at an Extraordinary Shareholders’ Meeting