The Paris-based hotel giant Accor has made a $1.2 billion all cash “hug” for Australia’s second biggest hotel operator Mantra Group. It is not an outright offer, more an attempt to gain the right to due diligence on Mantra, which has been granted.
Mantra shares leapt nearly 16% yesterday to end at $3.76.
Accor is Australia’s biggest hotel operator and has made an indicative, non-binding proposal to acquire Mantra at $3.96 a share, or $4.02 including the 6¢ final dividend paid in 2017.
The offer is at a big 23% premium to Mantra’s Friday closing price of $3.23 and values the business at $1.17 billion. Mantra floated at $1.80 in June 2014 and barring any jidden bombs in the books, Accor should win.
But its deal will have to be approved by the competition regulator, the ACCC because Accor is proposing to buy one of its major competitors..
Mantra operates more than 125 properties and in excess of 20,000 rooms under its Mantra, Peppers and Breakfree brands.
A takeover by Accor would see the merger of the country’s two biggest hotel operators, creating a giant hotel business in Australia with around a dozen brands, over 300 hotels and more than 50,000 rooms.
That will almost certainly draw close examination from the ACCC and perhaps some hotel sales to rivals to reduce overlap in some markets.
“The discussions are incomplete and any entry by the parties into binding transaction documents remains subject to a number of conditions, including (without limitation) the approval of both the Mantra and Accor Boards and agreement on documentation, Mantra said yesterday.
"If any proposal is agreed, the proposal will be subject to regulatory approvals and other conditions to be determined. Mantra says it has retained Highbury Partnership as financial adviser and Baker McKenzie as legal adviser to assist it in responding to the Accor proposal.
