France's Accor Offers $930 Million for Australia's Mantra

(Bloomberg) -- Accor SA, Europe’s biggest hotel operator, offered to buy Australia’s Mantra Group Ltd. in a deal valuing the hotel and resort company at A$1.2 billion ($930 million).

The French company offered A$3.96 per share in cash for Mantra and was given access to its books, the target said in a statement Monday. The indicative offer was 23 percent more than Friday’s closing price. Mantra shares jumped by a record 18 percent to A$3.81 in Sydney.

The deal would be Accor’s biggest acquisition in the Asia-Pacific region, giving it more than 20,000 rooms across Australia, New Zealand and Indonesia and access to a growing tourism market. A Mantra purchase would advance Accor’s efforts to add properties in the mid- and upscale markets, especially in the Asia-Pacific region, according to Bloomberg Intelligence
analyst Margaret Huang.

“The region already generates around 20 percent of total revenue and is supported by growing Chinese travel demand,” she said.

The number of international visitors to Australia is forecast to increase 13 percent to 9.2 million in the year through June 2018, and climb to 15 million within a decade, according to a government report.

Mantra closed up 16.4 percent in Sydney, while Accor was little changed at about 43 euros at 10:40 a.m. in Paris. The French company’s stock has increased 29 percent in the last 12 months, giving Accor a market value of 12.4 billion pounds.

This “is a financially attractive potential deal, though we would await clarity from Accor on what the group would do with the lease contracts -- circa 19 percent of rooms -- and what synergies would look like,” Barclays Plc analyst Vicki Stern wrote in a note.

HotelInvest Stake

Accor expects to raise more than 4 billion euros ($4.7 billion) from the sale of a stake in its HotelInvest property unit, a deal that may take place by the end of autumn, Chief Executive Officer Sebastien Bazin said in June. In 2016, Accor bought FRHI, the operator of the Fairmont, Raffles and Swissotel chains, to expand its presence in Asia and the U.S.

The Mantra offer could prompt rival bids, AllianceBernstein Holding LP analysts including Richard Clarke said in a note, citing reported interest in the chain from Marriott International Inc. in 2015. While the bid indicates that Accor expects to close the sale of a HotelInvest stake, the integration of Mantra will be complex, they said.

Accor already has 205 properties with 27,401 rooms in Australia, including Novotel, Ibis and Mercure hotels. Mantra’s properties include luxury retreats and coastal resorts as well as serviced CBD apartments.

Mantra has retained Highbury Partnership as its financial adviser and Baker McKenzie as legal adviser, according to the statement.

--With assistance from Matthew Burgess and Ross Larsen

To contact the reporter on this story: Zoe Ma in Sydney at zma13@bloomberg.net.

To contact the editors responsible for this story: Edward Johnson at ejohnson28@bloomberg.net, Neil Callanan at ncallanan@bloomberg.net, Andrew Blackman