Accor to sell Motel 6 to Blackstone for $1.9 bln
Accor is to sell its troubled U.S. budget hotel business for $1.9 billion to private equity group Blackstone (BX.N), in an expected move by the French hotel group to focus on growth outside the United States.
Accor will take a one-time non-cash hit of 600 million euros linked to the early buyout of fixed-lease hotels as part of the deal, and said net debt would be cut by 330 million euros and its fixed-lease commitments by 525 million.
"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," Chief Executive Denis Hennequin said.
Accor (ACCP.PA) shares were up 4.5 percent to 25.70 euros at 0933 GMT, the top gainer on the French blue-chip CAC 40 index .FCHI and giving it a market value of about 5.9 billion euros. The stock is up a third in value this year.
The sale includes Accor's Motel 6 and Studio 6 chains and comprises 1,102 hotels in Canada and the United States. The business had revenue of 532 million euros last year, down from 555 million in 2010, and operating profit of 15 million against a 4 million year-earlier loss.
Accor has been restructuring Motel 6 and shifting to an asset-light model where it no longer owns the hotel buildings. The company had signalled it was open to offers for the chain and said the sale would reduce earnings volatility.
"This is a business that hasn't performed particularly well over the last 20 years," Deutsche Bank analyst Simon Champion said. "Getting rid of it allows Accor to improve its balance sheet and gives it the possibility of returning cash to shareholders next year."
Accor said the accounting loss on the deal related to the repurchase of hotels on fixed leases, which was a precondition of their sale to Blackstone. It will be taken on completion of the transaction, expected in October.
Blackstone already has a strong presence in hotels, having bought the Hilton Worldwide hotel chain five years ago. More recently, it bought the U.S. Columbia Sussex hotel portfolio in late 2010 and European hotel chain Mint last year.
Blackstone plans to invest "significant capital" in Motel 6 properties and "accelerate the expansion of the franchise base", Jonathan Gray, Blackstone's global real estate head, said in a joint statement, without giving details.
Accor, the world's fourth-largest player behind InterContinental (IHG.L), Marriott (MAR.N) and Starwood Hotels (HOT.N), added that it would keep its presence in the luxury and high-end market in the U.S. with its Sofitel and Novotel brands.
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