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AccorHotels to acquire FRHI for $2.9bn in cash and shares deal

AccorHotels to acquire FRHI for $2.9bn in cash and shares deal Raffles Singapore, included in the deal, is one of the world's most prestigious hotels

AccorHotels has signed an agreement for the acquisition of FRHI Holdings, parent of the Fairmont, Raffles, and Swissôtel brand.

The deal will be carried out alongside partners Qatar Investment Authority, Kingdom Holding Company of Saudi Arabia and Oxford Properties, an Ontario Municipal Employees Retirement System company.

“This is an outstanding opportunity to add three prestigious brands – Fairmont, Raffles and Swissôtel – to our portfolio, and a great step forward for AccorHotels,” said Sébastien Bazin, chairman, 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.”

Bazin added: “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.”

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, and Fairmont San Francisco.

FRHI has more than 45,000 employees under its brands.

FRHI’s hotels and resorts span 34 countries across five continents, with 42 properties in North America, 2 in South America, 26 in Europe, 17 in Africa/Middle East and 28 in Asia-Pacific.

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.

AccorHotels aims to generate around €65 million in revenue and cost synergies thanks to the combination of brands, the maximisation of hotel earnings, the increased efficiency of marketing, sales and distribution channel initiatives, and the optimization of support costs.

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.

In total the deal is valued at $2.9 billion.

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 per cent and 5.8 per cent in Accor’s share capital.

Two representatives of QIA and one representative of KHC will be appointed to the Accor Board of Directors.