A demerger would enable each division to step up its pace of growth, Accor says. Accor SA’s board of directors has recommended separating the group’s prepaid services and hotels businesses, pending shareholder approval.
Reviews carried out by senior management at the board’s request showed that a demerger would enable each division to step up its pace of growth, the company says. The reviews concluded:
- There are no real synergies between hotels and prepaid services, which leverage unique skills and expertise and operate in increasingly different business environments
- Backed by sufficient independent financial resources, the businesses would be better positioned their competitive global marketplaces
- Separately, the two businesses—each with its own business model—would be more attractive to investors
- Each business’s growth prospects would lead to new projects for employees, thereby enhancing pride and motivation
Based on commitments made by two major shareholders acting in concert—Colony Capital and Eurazeo combine to own 30% of the company—Accor’s management team will submit a demerger proposal to shareholders sometime in 2010. The demerger proposal will also be submitted to employee representatives as part of the consultation process.
Accor’s services division sells a variety of prepaid benefits, such as gift vouchers or lunch vouchers to corporate human resources departments. Demerger proponents, including some analysts, believe the services division has been undervalued due to being overshadowed by the hotels operation. The services division generated as much as 60% of the company’s revenue last quarter.
“The demerger would create a new, solid, sustainable growth dynamic for both businesses, each of which is a global leader in its respective business,” says Accor CEO Gilles Pélisson. “It would also serve as a growth driver for both hotels and prepaid services, offering employees the opportunity to take part in two new entrepreneurial adventures, both of which have bright futures ahead of them.”
Pelisson will manage the separate hotels division, while Accor CFO Jacques Stern will head the services business. Olivier Poirot, CEO of Accor North America, becomes head of finance for the global hotels business, replacing Stern.
Commenting on the decision, Philippe Citerne, Vice-Chairman of the Board, says: “The management team deserves our congratulations for the high quality of the studies provided. Their reviews complied fully with the principles of corporate governance and enabled the board to reach a decision that supports the long-term interests of the group, its employees and its shareholders.”