Paris/Melbourne – 9 October 2017 –
Accor has bid A$1.18 billion (US$920 million) for Mantra Group – a deal that would combine the two biggest hotel owners in Australia and seek to capitalise on surging tourism in the country, Reuters reported.
Accor, already the biggest hotelier in Australia, offered A$3.96 a share, or a 23 percent premium to Mantra’s closing price on Friday. The total offer is worth A$4.02 per share if a six-cent final dividend paid in 2017 is included, Mantra said in a statement.
“They haven’t lowballed it, that’s for sure,” said Anthony Porto, portfolio manager at Martin Currie Australia, which owns a stake in Mantra.
A deal would be the second-largest in Australia’s hotel sector, but the industry is quite fragmented and shares in Sydney-listed Mantra surged 17 percent on Monday as investors bet the deal would have a fair shot at gaining regulatory clearance.
Mantra said it was allowing Accor to conduct due diligence “to determine if a transaction can be agreed and recommended unanimously by the Mantra board.”
Reuters said Accor’s bid comes as the country’s hoteliers rush to build extra rooms to meet growing demand. The number of visitors to Australia surged 9 percent in the past financial year to hit a record 7.9 million while spending by international visitors climbed to A$40.6 billion – also a record.
Visits from Chinese tourists – who tend to make longer trips and spend more – jumped 10 percent and visitor numbers from Europe and the United States also rose.
Porto said there was potentially a lot of savings to be gained from the deal as the firms’ back office and booking systems could be combined and Accor would benefit from having swallowed its biggest rival.
But he also noted the industry faced tough competition from disruptive newcomers such as Airbnb.
Together, Accor and Mantra would own over 300 hotels and about 50,000 rooms. That would give them roughly 11 percent of Australia’s hotel market, according to IBISWorld statistics.