IHG accepts $406m Qatari offer for Paris Hotel
Qatar Holding subsidiary purchasing InterContinental Paris - Le Grand
InterContinental Hotels Group (IHG) has accepted an offer from Constellation Hotels France Grand SA, an affiliate of Qatar Holding subsidiary Constellation Hotels Holding Limited, for the InterContinental Paris – Le Grand.
Constellation will pay €330 million (US $406 million) for the hotel, under terms which were originally announced in August.
Under these terms, Constellation will pay in cash upon finalisation of the deal, expected by the end of Q1 2015, and is also committing to invest over time an estimated €60 million in future hotel renovations.
IHG will retain a 30-year management contract on the hotel, with three 10-year extension rights at IHG’s discretion, giving an expected contract length of 60 years. Management fees are expected to be approximately €4 million (US $5 million) per annum.
The hotel group’s acceptance of the offer follows the conclusion of the information and consultation period with the relevant hotel employees’ representatives, and the execution of definitive legal documentation.
Located in the heart of Paris overlooking the Opera House, the hotel has 470 guest rooms, including 70 suites. It first opened in 1862 and has operated under the Intercontinental brand since 1982.
In 2013, it generated revenues of US $118 million and earnings before interest and tax of US $22 million and, at the end of June, had a net book value of $342 million. Cash taxes payable on the potential transaction are not expected to exceed US $5 million.
In October, Constellation purchased The St. Regis, Rome from Starwood Hotels & Resorts Worldwide for €110 million (US $150.7 million).