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AccorHotels has signed agreements with a group of international investors with a view to selling a majority of the capital of AccorInvest.
For Accor, the sale would result in a cash contribution of €4.4 billion.
Under the terms of the agreements, AccorHotels would initially sell 55 per cent of AccorInvest to sovereign funds, namely the Public Investment Fund of Saudi Arabia and GIC of Singapore, as well as institutional investors, including Credit Agricole Assurances, Colony NorthStar, and Amundi.
Sébastien Bazin, chief executive of AccorHotels, said: “These agreements represent a key milestone for the group.
“Following the separation of AccorInvest into a stand-alone legal entity last summer, we are now gathering a round-table of leading investors, on the basis of a valuation that fully reflects its global leadership and the quality of its assets, while building a long-term relationship between AccorHotels and AccorInvest.
“These elements were essential to make this operation a success for all stakeholders: teams, partners, as well as present and future shareholders of both entities.
“The entry of new shareholders and the deconsolidation of AccorInvest will provide AccorHotels with substantial leeway to enhance our dynamic growth and innovation strategy and create value for shareholders.
“For its part, AccorInvest will take advantage of its new powerful shareholders’ support, as well as a strengthened financial structure to execute its roadmap and continue to reinforce its portfolio of assets.”
The AccorInvest hotels would be operated by AccorHotels under very-long-term contracts, namely 50 years (including a 15-year renewal option) for luxury and upscale hotels and 30 years on average (including a ten-year renewal option) for hotels in the midscale and economy segments.
The management contract terms that have been negotiated between the parties are in line with market practices.
With close to 30,000 employees and operations in 27 countries, AccorInvest is the world leader in hotel real estate, with a current portfolio of 891 hotels.
The majority of these hotels are located in Europe, in the economy and midscale segments.
Of the total, 324 are owned and 567 are operated under fixed or variable-rent leases.
Under the terms of the agreements, the investors made binding undertakings to carry out the transaction and AccorHotels granted them an exclusivity, pending works council consultation.
The transaction is also subject to certain antitrust and regulatory approvals.
It will be submitted to a shareholders’ meeting of AccorHotels for consultation.
It is expected to be finalised in the second quarter of 2018.
AccorInvest would then be accounted for using the equity method in AccorHotels’ consolidated financial statements.
Following the closing of the transaction, AccorHotels intends to implement over a two-year period a share buyback program of up to €1.35 billion, around ten per cent of its share capital based on current market capitalisation.
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