FRHI to be acquired by AccorHotels for US $2.9bn

AccorHotels to acquire Fairmont, Raffles and Swissotel for US $2.9bn in cash and shares, improving its share in the luxury hotel market

AccorHotels chairman and CEO Sebastien Bazin.
AccorHotels chairman and CEO Sebastien Bazin.

AccorHotels has signed 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.

This finally rests the rumours of FRHI prospectively being on the market for new owners, and follows in the trend on high-profile mergers after the recent acquisition of Starwood by Marriott.

“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 AccorHotels chairman and CEO Sébastien Bazin.

He added that the deal gave the company "global leadership in luxury hotels", and also added to its human capital strength, with FRHI currently employing more than 45,000 people.

AccorHotels aims to generate around €65 million (US $71.65mn) 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 optimisation of support costs.

The agreement will take place with a cash payment of $840 million and the issuance of 46.7 million Accor shares.

QIA and KHC will then be left with 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, subject to approval.

Bazin continued: "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."

His Excellency Sheikh Abdulla Bin Mohammed Bin Saud Al-Thani, CEO of Qatar Investment Authority, said: “Since making our investment, Fairmont Raffles Hotels International has become a leading luxury hotel company with an expanded international presence.

"This deal generates the scale needed to drive the next phase of growth in our real estate and hospitality investments. QIA has confidence in AccorHotels and looks forward to becoming a significant shareholder.”

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 such 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.

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