Accor, Europe’s biggest hotel operator, offered to buy Australia’s Mantra Group in a deal valuing the hotel and resort company at $1.2bn (€795m).
The French company offered $3.96 per share in cash for Mantra and was given access to its books, the target said in a statement.
The indicative offer was 23% more than last week’s closing price and Mantra shares jumped by a record 18% in Sydney trade.
The deal would be Accor’s biggest acquisition in the Asia-Pacific region, giving it over 20,000 rooms across Australia, New Zealand, and Indonesia and access to a growing tourism market.
A Mantra purchase would advance Accor’s efforts to add properties in the mid- and upscale markets, especially in the Asia-Pacific region.
The region already generates around 20% of total revenue and is supported by growing Chinese travel demand, said an analyst.
The number of international visitors to Australia is forecast to increase 13% to 9.2m in the year through June 2018, and climb to 15m within a decade, according to a government report.
The French firm’s stock traded slightly higher in Paris. They have increased 30% in the last 12 months, giving Accor a market value of €12.5bn.
This “is a financially attractive potential deal, though we would await clarity from Accor on what the group would do with the lease contracts — circa 19% of rooms — and what synergies would look like,” Barclays Plc analyst Vicki Stern wrote in a note.
Accor expects to raise more than €4bn from the sale of a stake in its HotelInvest property unit, a deal that may take place by the end of autumn, chief executive Sebastien Bazin said in June.
In 2016, Accor bought FRHI, the operator of the Fairmont, Raffles and Swissotel chains, to expand its presence in Asia and the US.
The Mantra offer could prompt rival bids, AllianceBernstein analysts including Richard Clarke said in a note, citing reported interest in the chain from Marriott International in 2015.
While the bid indicates that Accor expects to close the sale of a HotelInvest stake, the integration of Mantra will be complex, they said.
Accor already has 205 properties with 27,401 rooms in Australia, including Ibis, Novotel, and Mercure hotels. Mantra’s properties include luxury retreats and coastal resorts as well as serviced CBD apartments.
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