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AccorHotels buys Mantra in rapid regional rise

October 13, 2017 Headline News No Comments Email Email

AccorHotels has taken another giant step in the Asia Pacific region with a deal to buy Mantra Group Limited for over AUD 1.3 billion.

Whether this will entail a total rebranding for Mantra or a new brand for AccorHotels remains to be seen. What’s known is that AccorHotels will acquire all shares of Mantra for AUD 3.96 per share.

AccorHotels will add all Mantra’s 127 hotels to its network across Australia, New Zealand, Indonesia and the United States (Hawaii). Both parties expect the transaction to be completed by the end of the first quarter 2018, subject to the usual regulatory and shareholder approvals.

The move will push AccorHotels’ network to over 370 hotels in the Australasian region.

Mantra Charles Hotel, Launceston

Chairman and Chief Executive Officer of AccorHotels, Sébastien Bazin, said the acquisition of Mantra would “underpin our long-term growth in the Asia Pacific region” as Mantra’s portfolio delivered additional accommodation formats and a strong customer base to AccorHotels “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: “The AccorHotels offer represents an attractive proposition for Mantra and for our shareholders and 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.”

Mantra Group said earlier in a statement: “The Directors of Mantra unanimously recommend that Mantra shareholders vote in favour of the Scheme, and intend to vote Mantra shares in their control in favour of the Scheme, in each case in the absence of a superior proposal and subject to an Independent Expert concluding that the Scheme is in the best interest of Mantra shareholders.

AccorHotels’ new Sofitel Sydney Darling Harbour, with the group’s Novotel and Ibis properties visible in the background

“The Scheme is also subject to certain regulatory approvals being met,” the Board said.

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 accommodation and coastal resorts to serviced apartments in city and key 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 5500 employees.

Here’s the fine print:

The Offer Price represents:

  • A 23% 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 AUD 1.3 billion, equivalent to EUR 0.9 billion.
  • Besides, AccorHotels confirms it is in discussion with potential investors in relation to the sale of part of the Share Capital of AccorInvest. The Group aims at signing an agreement before year-end 2017. At this stage, the Group has no certainty to reach an agreement.
  • 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, as well as the approval of Mantra shareholders and other customary conditions.
  • It is anticipated that subject to regulatory and shareholder approvals, the transaction should be completed by the end of the first quarter 2018.

Written by Peter Needham

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