Less than a month after Marriott International announced that it would acquire Starwood Hotels & Resorts Worldwide, the hotel brand consolidation game continues apace. AccorHotels has announced the signing of an agreement with the Qatar Investment Authority, Kingdom Holding Company of Saudi Arabia and Oxford Properties (an Ontario Municipal Employees Retirement System company) for the acquisition of FRHI Holdings, parent company of the Fairmont, Raffles and Swissôtel brands.
AccorHotels will pay for the acquisition by issuing 46.7 million new Accor shares and a cash payment of $840 million, while The Qatar Investment Authority and Kingdom Holding Company of Saudi Arabia will become major shareholders, with 10.5 percent and 5.8 percent of the share capital, respectively. Two representatives of QIA and one representative of KHC will be appointed to the Accor Board of Directors.
The deal is reportedly expected to close mid-2016. In an email to partners, FRHI Holdings Chairman and CEO William R. Fatt said that until the closing, the two companies would continue to operate independently and "manage their business affairs as usual."
The transaction will be accretive to earnings per share from the second year with €65 million in revenue and cost synergies identified in the medium term, AccorHotels said in a statement. The company also expects to make improvements in terms of customer data through the integration of a customer base including 3 million loyalty members, 75 percent of whom are North Americans.
FRHI has 155 hotels and resorts (of which 40 are under development), and more than 56,000 rooms (of which approximately 13,000 are under development). Its portfolio includes the Raffles Singapore, The Savoy in London, Shanghai’s Fairmont Peace Hotel, The Plaza Hotel in New York, Le Royal Monceau - Raffles Paris, Fairmont San Francisco, Fairmont Banff Springs (Canada), Fairmont Le Château Frontenac in Quebec, the Fairmont Grand Del Mar in San Diego and Swissôtel The Stamford in Singapore. 108 of these hotels are operated under very long-term management contracts, with average remaining terms of nearly 30 years; six hotels are leased and one hotel is owned.
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.