AccorHotels confirmed an agreement with Mantra Group late last week, inching towards acquisition. Accomnews spoke with TAA, ACCC and AccorHotels about what this latest takeover news signals for the sector.
TAA CEO Carol Giuseppi spoke with Accomnews on Friday, stating that the agreement is reflective of the current market.
She said: “The Accor/Mantra acquisition is testament to the strength of the accommodation market, with international visitor night growing by 34 percent since June 2011, and domestic visitor night by 27 percent over the same period. Australia wide, there are approximately 25,000 rooms either approved or under construction to meet the increase in demand.”
The Group aims to sign an agreement before year-end 2017 but, at this stage, there is no absolute certainty that the agreement will be signed, though the parties involved maintain optimism.
Under the terms of the agreement, AccorHotels would offer $3.96 in cash for each Mantra share, including any potential special dividend. According to AccorHotels’ COO, Simon McGrath, the company has admired Mantra as a business for some time.
“Their cultural values very much align with ours,” he explained. “They have achieved excellent market standing and quality operations in areas that are very complimentary to our business. Over the 27 years that AccorHotels has operated in Australia and New Zealand, AccorHotels has grown to be the largest hotel operator in the Pacific. We have great confidence in the tourism market and this transaction demonstrates our continued commitment to growing in this region, providing exciting employment opportunities and enhancing the customer experience.”
“This transaction is in the early stages, and is subject to approvals; however, we believe it has significant potential for our operations in Australia and New Zealand and for the growth in the region,” he told Accomnews.
Sébastien Bazin, chairman and chief executive officer of AccorHotels said that the company is delighted to have come to an agreement to acquire the Mantra Group.
“This operation will underpin our long-term growth in the Asia Pacific region. Mantra’s portfolio would offer AccorHotels additional accommodation formats and a strong customer base to complement our successful hotel portfolio in Australia. We are confident that the transaction terms are attractive for shareholders of both groups.”
Chairman of Mantra, Peter Bush, said that the AccorHotels offer represents an attractive proposition for Mantra and its shareholders, and that the Board unanimously recommends AccorHotels’ proposal.
“AccorHotels is one of the world’s leading hotel operators and we trust that our business will be in good hands. Mantra’s strong expertise in apartments, in particular, and our presence in resort locations are very complementary to the AccorHotels operations in Australia and New Zealand. The combined business will be an important part of Australia’s strong and growing tourism market and its customers will benefit from the market leading expertise of both groups.”
“Since their IPO in 2014, we have admired the way in which the Mantra team have continued to create significant value for their shareholders as a result of the successful operation and growth of the business, and this proposal from AccorHotels reflects the world-class quality of the Mantra management, business and brands,” Ms Magraith shared.
Mantra is one of Australia’s largest hotel and resort marketers and operators with 127 properties and over 20,000 rooms in hotels, resorts and serviced apartments across Australia, New Zealand, Indonesia and Hawaii.
Properties in Mantra’s portfolio range from luxury accommodations and coastal resorts to serviced apartments in city and leisure destinations under three key brands: Peppers (28 properties), Mantra (75 properties) and BreakFree (24 properties). Mantra also manages core accommodation services including guest relations and reception areas, restaurants and bars, conference and function centres, pool and entertainment facilities and offices. Mantra has more than 5,500 employees.
AccorHotels and Mantra’s combined geographic footprint, together with enhanced distribution and systems, would form a favourable base from which AccorHotels can expand further in the region. Mantra’s expertise in apartment management, in particular, will offer a new opportunity for growth.
The offer price represents:
- A 23 percent premium to the last close price of AUD3.23 as at 6 October, 2017
- An implied EV / 2018e EBITDA (including transaction costs) multiple of 12.4x pre-synergies and high single-digit post-synergies.
The acquisition will be accretive to earnings per share in the first year of ownership pre-synergies. AccorHotels will pay $1.3 billion.
AccorHotels confirmed it is in discussion with potential investors in relation to the sale of part of the Share Capital of AccorInvest.
All subject to approval, the transaction is expected to be complete on or around March 2018.
The transaction is subject to regulatory approvals, including from the Australian Foreign Investment Review Board, the Federal Court of Australia and the Australian Competition and Consumer Commission (ACCC), as well as the approval of Mantra shareholders and other customary conditions.
A spokesperson for ACCC explained their role in the process to Accomnews.
“Basically, we have a role in any mergers that might substantially lessen competition, which is separate from the Foreign Investment Review Board. Generally speaking, we look at competition levels in the market. If we undertake a formal review we see comments from people in the market place on what’s going on, and if we have no concerns we waive it through. If we do have concerns we put out a document called a statement of issues which outlines our concerns and then businesses can try and amend their deal to address those concerns.