Accor Bids For Australian Mantra Hotel Group

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Accor seems to continue its shopping spree this time targeting Australian hotel group called Matra that operates 128 properties mainly under brands such as Mantra, Peppers and Breakfree. In addition to Australia, the group has hotels in Indonesia, New Zealand, and Hawaii.

Accor Mantra

Mantra mainly manages hotels on behalf others (asset light strategy) and seems to have mainly lower end brands. Accor and Matra would combined have more than 300 hotels in Australia and control 11% of the market.

Here’s an excerpt from Australian Financial Review (read the article here):

Shares in Mantra Group soared more than 16 per cent on Monday after Paris-listed global hotel giant Accor made a $1.2 billion all-cash offer to buy Australia’s second biggest hotel and resort operator.

A merger of the country’s two biggest accommodation providers would create a local hotel giant with a national portfolio of more than 300 hotels, a dozen or so brands and in excess of 50,000 rooms – about five times bigger than its nearest competitor, franchisor Choice Hotels.

Accor’s indicative and non-binding proposal to acquire Mantra Group at $3.96 a share was at a 23 per cent premium to Mantra’s Friday closing price of $3.23, and valued the business at $1.17 billion.

Mantra Group, which operates more than 125 properties and in excess of 21,500 rooms under its Mantra, Peppers and Breakfree brands, said it had granted Accor access to due diligence “to determine if a transaction can be agreed and recommended unanimously by the Mantra board”.

Conclusion

It is not sure if this deal will go through. There could be other bidders or Accor may decide after looking at Mantra’s books that they will withdraw their bid. Australian Competition and Consumer Commission may have their say as well.

One can only wonder if this Accor’s shopping spree makes any sense? They are buying brands and companies left and right like there is no tomorrow (and likely at the top of the market prices).

Accor hasn’t don’t good job integrating the previous purchases to their platform and brands yet. Wouldn’t it be better trying to make sure that previous purchases are properly cultivated and developed rather than buying more lower end hotels?

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