Issued on • Modified
LVMH to buy Belmond luxury hotel group for €2.8 billion
Luxury giant LVMH is to extend its investment in the hospitality industry by buying London-based hotel group Belmond in a transaction worth 2.8 billion euros, the French company announced on Friday. Belmond owns high-end hotels including the Copacabana Palace in Rio de Janeiro and Cipriani in Venice.
LVMH said it would acquire Belmond for 25.00 dollars per class A share in cash, a premium of 42 percent over their closing value of 17.65 dollars on the New York Stock Exchange on Thursday.
LVMH paid well over Belmond's equity value of 2.6 billion dollars (2.3 billion euros), putting its enterprise value, which includes debt and preferred shares, at 3.2 billion (2.8 billion euros).
"This acquisition will significantly increase LVMH's presence in the ultimate hospitality world," company boss Bernard Arnault said. "Belmond delivers unique experiences to discerning travellers and owns a number of exceptional assets in the most desirable destinations."
Arnault himself is the world's fourth-richest individual and the Belmond purchase is a bid to please his peers, or "satisfy the rising class of billionaires who are increasingly demanding", as analysts Invest Securities put it.
"Across the consumer sector, the move to spending on experiences instead of things is gaining traction," comments Andrea Felsted in Bloomberg Opinion. "Luxury is no different."
As well as hotels, Belmond specialises in luxury cruises.
It also owns the Venice Simplon-Orient-Express train.
Although it is registered in Bermuda, a well-known tax haven, the company's headquarters in London.
It employs 8,000 people in 24 countries and had a turnover of 572 million dollars (507 million euros) in the year to September.
LVMH currently employs about 1,000 people in the hotels it already owns, which include the Cheval Blanc in the swish French ski resort of Courchevel and the Randheli in the Maldives.
It is planning to open two hotels in central Paris in 2020.