Accor Hotels pays US$2.9 billion for Fairmont, Raffles, Swissotel
AccorHotels will pay for the acquisition by issuing 46.7 million new Accor shares and a cash payment of $840 million (€768 million) – Qatar Investment Authority and Kingdom Holding Company of Saudi Arabia are to become major shareholders, with 10.5% and 5.8% of the share capital* respectively
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 today announces the signing of an agreement with the Qatar Investment Authority (QIA), Kingdom Holding Company (KHC) of Saudi Arabia and Oxford Properties, an Ontario Municipal Employees Retirement System (OMERS) company for the acquisition of FRHI Holdings Ltd (FRHI), parent of Fairmont, Raffles, and Swissôtel.
FRHI includes three of the most prestigious 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 (of which approximately 13,000 are under development). Its portfolio includes such legendary properties as 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. FRHI has more than 45,000 employees under its brands.
FRHI’s hotels and resorts span 34 countries across five continents, with 42 proerties in North America, 2 in South America, 26 in Europe, 17 in Africa/Middle East and 28 in Asia-Pacific. They are located in the world’s major tourist destinations, particularly in the United States, the leading outbound travel market. The vast majority of hotels (108) 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.
The acquisition of these three global brands will strategically enhance AccorHotels’ brand portfolio, and will provide 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.
With nearly 500 luxury and upscale properties, AccorHotels will become one of the key global players in this segment and will be able to offer the most profitable management contracts and the best growth potential in many markets. FRHI teams will bolster AccorHotels’ expertise in the luxury segment and provide the Group with new ambitions, through targeted, value-creative expansion.
AccorHotels aims to generate around €65 million in revenue and cost synergies thanks to the combination of brands, the maximization of hotel earnings, the increased efficiency of marketing, sales and distribution channel initiatives, and the optimization of support costs. Significant improvements will also be made in terms of customer data, thanks to the integration of a customer base including 3 million loyalty members, of which 75% are North Americans. The transaction will be accretive on earnings per share from the second year, with synergies fully effective by the third year.
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.