NEW YORK CITY (dpa-AFX) - Accor SA (ACRFF.PK, ACRFY.PK) on Tuesday agreed to sell its U.S. budget hotel chain Motel 6 to US-based investment and advisory firm Blackstone Group LP (BX) for $1.9 billion as the French hotel group aims to focus on regions with tremendous growth potential. The transaction would be completed in October, subject to the unwinding of leases and customary closing conditions.
In the deal, an affiliate of Blackstone Real Estate Partners VII would buy the United States Economy Hotels Division from Accor that also includes Studio 6, an extended-stay economy chain. The network comprises of 1,102 hotels with 107,347 rooms in the USA and in Canada.
Accor Chairman and CEO Denis Hennequin said, 'This deal will provide Accor with additional resources to address the tremendous growth potential in the Asia Pacific region, in Latin America and in Europe, where the leadership of our brands is one of the key drivers of our future growth.'
According to Accor, the sale strengthens its economic model and follows its decision to reduce capital employed in Motel 6 and Studio 6, as announced in September 2011.
Based on fiscal 2011 pro forma results, the French firm's restated return on capital employed increases to 13.9 percent from 12.3 percent, and the EBIT margin reaches 9.2 percent compared to 8.7 percent.
The deal also reinforces its asset-light profile and further reduces the volatility of the results, with franchise and management contracts accounting for more than 54 percent of the pro forma total room portfolio as of March 2012, Accor noted.
With the sale, Accor will be able to reduce its net debt by about 330 million euros and its fixed-lease commitments by about 525 million pounds. The company expects to record an exceptional non-cash loss of about 600 million euros, linked to the early buyout of fixed-lease hotels.
Jonathan Gray, Global Head of Real Estate at Blackstone, said, 'Although Motel 6 will be operated on a stand-alone basis, similar to other lodging investments we have made on behalf of our investors, we plan to invest significant capital in the Company's properties and to accelerate the expansion of the franchise base.'
Accor added that it will remain present in North America with luxury and upscale flagships under the Sofitel and Novotel brands. Accor is currently present in 92 countries with more than 4,400 hotels and 530,000 rooms.
Accor recently sold Novotel Times Square in New York and Pullman Paris Rive Gauche.
Meanwhile, it added 67 Asia Pacific Hotels and a further 117 hotels were committed in 2011, while it expects to integrate some 100 additional hotels during 2012. Accor also agreed to buy Mirvac Hotels & Resorts, the hotel management arm of Australia-based Mirvac Group (MGR.AX).
Accor had said earlier that these deals confirm its ability to continue to actively manage its assets, in line with its asset-management strategy of reducing adjusted net debt by 2.2 billion euros by 2015.
Accor shares are currently trading at 25.93 euros, up 1.33 euros or 5.41 percent in Paris.
In the U.S., Blackstone shares closed Monday's trading at $11.70, up $0.16 or 1.39 percent.
Copyright RTT News/dpa-AFX
© 2012 AFX News
