AccorHotels acquisition continued on Thursday as it signed a deal valued at A$1.2 billion (US$934 million) to acquire Mantra Group for A$3.96 in cash for each Mantra share, including any potential special dividend.
The move makes AccorHotels an even bigger hotel giant on the continent, adding 15% to its count in the Asia Pacific. Mantra’s 127 hotels and more than 20,000 rooms under three brands in Australia, New Zealand, Indonesia and Hawai, will be added to Accor’s 210 properties and 30,000 rooms.
The deal importantly includes serviced-apartments via Mantra’s management letting rights business, which comprises two-thirds of its portfolio. It will complement Accor’s recent acquisitions of Travel Keys, Onefinestay, and Squarebreak, and give Accor a great opportunity to compete with shared economy providers such as Airbnb.
Analysts said the timing of the deal could be right for Accor, as well. A Morgan Stanley told The Sydney Morning Herald, “We expect any pressure on household costs to bring more trading down to domestic destinations, and we’d expect real resilience from Mantra’s resorts business. So tighter budgets and a willingness from the consumer to trade down could lead to a shift away from long-haul international travel into the domestic market – fewer planes, more cars; less Cannes, more Cairns.”
The offer price represents a 23% premium to the October 6 close price of A$3.23. The transaction values Mantra at 12.4x EBITDA currently, which Baird Equity Analyst Michael Bellisario notes, is higher than Marriott’s recent tuck-in acquisitions of Protea and Delta at ~10x EBITDA.
Bellisario added that other companies were reportedly interested in Mantra, including HNA. He added that Marriott has expressed an interest in expanding its Australian footprint and the company was reported to be considering a bid for Mantra earlier this year (albeit at a lower price).