[M&A] The luxury group LVMH announced on Friday that it has reached an agreement to acquire the Belmond group, a luxury hotel operator based in London and listed in New York, confirming information from the Wall Street Journal.
LVMH’s offer to purchase is $ 25 per Belmond share in cash, valuing the hotel company at $ 2.6 billion – about $ 2.3 billion – excluding debt and cash. This offer represents a premium of more than $ 7 per share compared to Belmond’s closing price on Thursday on the New York Stock Exchange. Including debt, Belmond’s enterprise value is $ 3.2 billion.
The completion of the transaction, which remains subject to the approval of Belmond shareholders, is expected in the first half of 2019, said LVMH in a statement.
Founded more than 40 years ago with the acquisition of the Cipriani Hotel in Venice, Belmond is one of the last hotel groups to own most of the properties it manages. Its portfolio includes the Cipriani of Venice, the Grand Hotel Europe of St. Petersburg and the Copacabana of Rio de Janeiro. The group also offers luxury rail travel, cruises in Europe and Asia and has the famous 21 Club restaurant in New York. The company is present in 24 countries.
Over the twelve months to the end of September 2018, Belmond achieved a turnover of 572 million dollars (504 million euros) and an adjusted EBITDA of 140 million dollars (123 million euros).
“The acquisition of Belmond, perfectly complementary to our Cheval Blanc houses and Bulgari’s hotel activities, will significantly strengthen LVMH’s presence in the world of exceptional hospitality,” commented Bernard Arnault, CEO of LVMH. , quoted in the statement.
The owner of Louis Vuitton stands out as the surprising winner of a highly contested sales process. After years of rejecting purchase offers, the Belmond Board of Directors announced in August a strategic review that resulted in the sale of the company. For several weeks, sovereign funds from Asia and the Middle East, private equity funds and large hotel groups dominated this process.
“Following the strategic review that has mobilized a large number of real estate and hotel companies, sovereign wealth funds and other financial institutions around the world, the Board of Directors has concluded that LVMH’s offer brings a favorable valuation. for the shareholders that interesting prospects for development within a group able to rely on the assets and teams of Belmond, “said Roland Hernandez, president of Belmond.
Belmond shares have jumped more than 50% since the announcement of its strategic review.
OFFICIAL PRESS RELEASE :
LVMH reaches an agreement with Belmond to increase its presence in the ultimate hospitality world
LVMH Moët Hennessy Louis Vuitton (LVMH.PA), the world’s leading luxury group and Belmond Ltd. (NYSE: BEL), owners, part-owners or managers of 46 luxury hotel, restaurant, train and river cruise properties, today jointly announced that they have entered into a definitive agreement for LVMH to acquire Belmond. LVMH is to acquire Belmond for $25.00 per Class A share in cash. This represents an equity value of $2.6 billion in a transaction with an enterprise value of $3.2 billion. In the twelve months ended September 30, 2018, Belmond recorded total revenues of $572 million and adjusted EBITDA of $140 million. The transaction is expected to complete in the first half of 2019 subject to the approval of Belmond’s shareholders and clearance by the relevant competition authorities.
Established over 40 years ago with the acquisition of Hotel Cipriani in Venice, Belmond owns and operates a global collection of exceptional hotel and luxury travel adventures in some of the world’s most inspiring and enriching destinations. The company operates in 24 countries with its unique and distinctive portfolio of 46 hotel, rail and river cruise experiences.
Belmond’s iconic properties include hotels like Hotel Cipriani in Venice, Hotel Splendido in Portofino, Copacabana Palace in Rio de Janeiro, Le Manoir aux Quat’Saisons in Oxfordshire, Grand Hotel Europe in St. Petersburg, Maroma Resort & Spa in Mexico, Hotel das Cataratas in the Iguassu National Park in Brazil, and Cap Juluca in Anguilla. Legendary trains, such as the Venice Simplon-Orient-Express and Belmond Royal Scotsman and exceptional cruises such as Belmond Afloat in France fleet and Belmond Road to Mandalay, complete a portfolio that offers extraordinary experiences with curated activities and an understated personal service to a globally-diverse, highly refined customer.
Through this acquisition, LVMH will significantly increase its presence in the ultimate luxury hotel world. Synonymous with history, heritage and timeless experiences, Belmond has a seasoned management team and is an ideal complement to the Cheval Blanc maisons, renowned for their exceptional service, architecture and unique gastronomy.
Roland Hernandez, Chairman of the Board of Directors of Belmond Ltd, commented: “Following a strategic review that attracted broad and deep interest from a wide range of real estate and lodging companies, sovereign wealth institutions and other financial buyers around the world, the Board has concluded that this transaction with LVMH provides compelling and certain value for our shareholders as well as an exciting path forward with a group that appreciates Belmond’s irreplaceable assets and strong management team.”
Roeland Vos, Belmond’s President and Chief Executive Officer, said: “Today’s announcement is the result of the strong execution of our strategic vision that builds on our pioneering legacy and is an exciting development for all stakeholders, including our employees. We are confident that, as part of LVMH’s world-class family of brands, Belmond’s ability to deliver timeless, one-of-a-kind luxury experiences will reach new levels.”
Bernard Arnault, Chairman and Chief Executive Offer of LVMH, added: “Belmond delivers unique experiences to discerning travelers and owns a number of exceptional assets in the most desirable destinations. Its heritage, its innovative services, its excellence in execution and its entrepreneurship resonates well with the values of the Group and is complementary to our own Cheval Blanc maisons and the Bvlgari hotels activities. This acquisition will significantly increase LVMH’s presence in the ultimate hospitality world.”
LVMH Moët Hennessy Louis Vuitton is represented in Wines and Spirits by a portfolio of brands that includes Moët & Chandon, Dom Pérignon, Veuve Clicquot Ponsardin, Krug, Ruinart, Mercier, Château d’Yquem, Domaine du Clos des Lambrays, Château Cheval Blanc, Colgin Cellars, Hennessy, Glenmorangie, Ardbeg, Belvedere, Woodinville, Volcán de Mi Tierra, Chandon, Cloudy Bay, Terrazas de los Andes, Cheval des Andes, Cape Mentelle, Newton, Bodega Numanthia and Ao Yun. Its Fashion and Leather Goods division includes Louis Vuitton, Christian Dior Couture, Celine, Loewe, Kenzo, Givenchy, Thomas Pink, Fendi, Emilio Pucci, Marc Jacobs, Berluti, Nicholas Kirkwood, Loro Piana, RIMOWA and Jean Patou. LVMH is present in the Perfumes and Cosmetics sector with Parfums Christian Dior, Guerlain, Parfums Givenchy, Kenzo Parfums, Perfumes Loewe, Benefit Cosmetics, Make Up For Ever, Acqua di Parma, Fresh, Fenty Beauty by Rihanna and Maison Francis Kurkdjian. LVMH’s Watches and Jewelry division comprises Bvlgari, TAG Heuer, Chaumet, Dior Watches, Zenith, Fred and Hublot. LVMH is also active in selective retailing as well as in other activities through DFS, Sephora, Le Bon Marché, La Samaritaine, Groupe Les Echos, Cova, Le Jardin d’Acclimatation, Royal Van Lent and Cheval Blanc hotels.
Belmond (Belmond.com) is a global collection of exceptional hotel and luxury travel adventures in some of the world’s most inspiring and enriching destinations. Established over 40 years ago with the acquisition of Belmond Hotel Cipriani in Venice, its unique and distinctive portfolio now embraces 46 hotel, rail and river cruise experiences, excluding one scheduled for a 2019 opening in London, in many of the world’s most celebrated destinations. From city landmarks to intimate resorts, the collection includes Belmond Grand Hotel Europe, St. Petersburg; Belmond Copacabana Palace, Rio de Janeiro; Belmond Maroma Resort & Spa, Riviera Maya; and Belmond El Encanto, Santa Barbara. Belmond also encompasses safaris, seven luxury tourist trains, including the Venice Simplon-Orient-Express, and two river cruises. Belmond also operates ’21’ Club, one of New York’s most storied restaurants. Further information on the Company can be found at investor.Belmond.com.
A conference call will take place on Friday 14th December at 3pm (Paris time).
Number to call from:
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“This document may contain certain forward looking statements which are based on estimations and forecasts. By their nature, these forward looking statements are subject to important risks and uncertainties and factors beyond our control or ability to predict, in particular those described in LVMH’s Reference Document which is available on the website (www.lvmh.com). These forward looking statements should not be considered as a guarantee of future performance, the actual results could differ materially from those expressed or implied by them. The forward looking statements only reflect LVMH’s views as of the date of this document, and LVMH does not undertake to revise or update these forward looking statements. The forward looking statements should be used with caution and circumspection and in no event can LVMH and its Management be held responsible for any investment or other decision based upon such statements. The information in this document does not constitute an offer to sell or an invitation to buy shares in LVMH or an invitation or inducement to engage in any other investment activities.”
This news release and related oral presentations by management contain, in addition to historical information, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements regarding Belmond’s three-point growth strategy, future revenue, earnings, RevPAR, EBITDA and adjusted EBITDA, statement of operations and cash flow outlook, investment plans, debt refinancings, asset acquisitions, leases and sales, entry into third-party management contracts, operating synergies and revenue opportunities, operating systems, and benefits of Belmond’s brand and similar matters that are not historical facts and therefore involve risks and uncertainties. These statements are based on management’s current expectations and beliefs regarding future developments, are not guarantees of performance and are subject to a number of uncertainties and risks that could cause actual results to differ materially from those described in the forward-looking statements. Factors that may cause actual results, performance and achievements to differ from those express or implied in the forward-looking statements include, but are not limited to, those mentioned in the news release and oral presentations, the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement, the inability to complete the proposed merger due to the failure to obtain shareholder approval for the proposed merger or the failure to satisfy other conditions to completion of the proposed merger, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the transaction, risks related to disruption of management’s attention from Belmond’s ongoing business operations due to the transaction, the effect of the announcement of the proposed merger on Belmond’s relationships with its customers, operating results and business generally, the risk that the proposed merger will not be consummated in a timely manner, exceeding the expected costs of the merger, our ability to execute and achieve our three-point growth strategy, future effects, if any, on the travel and leisure markets of terrorist activity and any police or military response, varying customer demand and competitive considerations, failure to realize expected hotel bookings and reservations and planned real estate sales as actual revenue, inability to sustain price increases or to reduce costs, rising fuel costs adversely impacting customer travel and Belmond’s operating costs, fluctuations in interest rates and currency values, uncertainty of negotiating and completing any future asset acquisitions, leases, sales and third-party management contracts, debt refinancings, capital expenditures and acquisitions, inability to reduce funded debt as planned or to obtain bank agreement to any future requested loan agreement waivers or amendments, adequate sources of capital and acceptability of finance terms, possible loss or amendment of planning permits and delays in construction schedules for expansion projects, delays in reopening properties closed for repair or refurbishment and possible cost overruns, shifting patterns of tourism and business travel and seasonality of demand, adverse local weather conditions, possible challenges to Belmond’s ownership of its brands, Belmond’s reliance on technology systems and its development of new technology systems, changing global or regional economic conditions and weakness in financial markets which may adversely affect demand, legislative, regulatory and political developments (including the evolving political situation in Ukraine, Brazil, and Peru, and regional events in Myanmar, in the United Kingdom in respect of its withdrawal from the European Union and in the United States in respect of its evolving immigration and trade policies and the Tax Cuts and Jobs Act of 2017, and the resulting impact of these situations on local and global economies, exchange rates and on current and future demand), the threat or current transmission of epidemics, infectious diseases, and viruses, such as the Zika virus which may affect demand in Latin America, including the Caribbean, and elsewhere, and possible challenges to Belmond’s corporate governance structure. Further information regarding these and other factors that could cause management’s current expectations and beliefs not to be realized is included in the filings by Belmond with the U.S. Securities and Exchange Commission. Except as otherwise required by law, Belmond undertakes no obligation to update or revise publicly any forward-looking statement, whether due to new information, future events or otherwise.
Additional Information and Where to Find It
In connection with the proposed transaction between Belmond and LVMH, Belmond intends to prepare and distribute to its shareholders a proxy statement. To facilitate Belmond’s shareholders’ review and consideration of the proposed transaction, Belmond intends to furnish the proxy statement with the U.S. Securities and Exchange Commission (the “SEC”) on a Current Report on Form 8-K. BELMOND’S INVESTORS AND SECURITY HOLDERS ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE, INCLUDING THE PROXY STATEMENT, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain copies of the proxy statement as well as other filings containing information about Belmond, without charge, at the SEC’s website, http://www.sec.gov. Copies of the documents filed with the SEC by Belmond will also be available free of charge within the investor relations section of Belmond’s website at investor.belmond.com. Belmond is incorporated in the Islands of Bermuda and is a “foreign private issuer” within the meaning of the rules of the SEC. As such, Belmond is exempt from the disclosure and procedural requirements of the SEC’s proxy rules.
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