InterContinental Hotels Group PLC (IHG) [LON:IHG, NYSE:IHG (ADRs)] today announces that it has received a binding offer from Constellation Hotels Holding Limited (“Constellation”) to acquire InterContinental Paris – Le Grand (the “Hotel”). The proposed purchase price is €330 million ($442 million1), payable in cash at completion. Constellation has made a further commitment to invest over time an estimated €60 million in future hotel renovations.
The terms of the offer are such that IHG would retain a 30 year management contract on the Hotel, with three 10 year extension rights at IHG’s discretion, giving an expected contract length of 60 years. Management fees are expected to be approximately €4m ($5m1) per annum.
The Hotel, which is located in the heart of Paris overlooking the Opera House, has 470 guest rooms, including 70 suites. It first opened in 1862 and has operated under the InterContinental brand since 1982. In 2013, the Hotel generated revenues of $118m and EBIT of $22m, and as at 30 June 2014, had a net book value of $342m. Cash taxes payable on the potential transaction are not expected to exceed $5m.
Following receipt of the offer, IHG has agreed to a period of exclusivity with Constellation, and, in line with applicable French legal requirements, IHG will enter into an information and consultation period with the relevant employees’ representatives.
A further announcement will be made in due course.
Richard Solomons, Chief Executive Officer of IHG commented: “The InterContinental Paris – Le Grand is an exceptional property and is an iconic hotel in our portfolio. This announcement demonstrates the continued successful implementation of our asset-light strategy and the strength of our relationship with Constellation, following its recent purchase of InterContinental London Park Lane and its majority investment in InterContinental New York Barclay. This potential transaction is yet another example of the enduring appeal of InterContinental as one of the world’s leading luxury hotel brands.”
Media Relations (Yasmin Diamond; Zoë Bird): +44 (0) 1895 512008
Notes to Editors:
IHG (InterContinental Hotels Group) [LON:IHG, NYSE:IHG (ADRs)] is a global organisation with a broad portfolio of nine hotel brands, including InterContinental® Hotels & Resorts, Hotel Indigo®, Crowne Plaza® Hotels & Resorts, Holiday Inn® Hotels & Resorts, Holiday Inn Express®, Staybridge Suites®, Candlewood Suites®, EVEN™ Hotels and HUALUXE® Hotels and Resorts.
IHG manages IHG® Rewards Club, the world's first and largest hotel loyalty programme with over 80 million members worldwide. The programme was relaunched in July 2013, offering enhanced benefits for members including free internet across all hotels, globally.
IHG franchises, leases, manages or owns over 4,700 hotels and 693,000 guest rooms in nearly 100 countries, with almost 1,200 hotels in its development pipeline.
InterContinental Hotels Group PLC is the Group's holding company and is incorporated in Great Britain and registered in England and Wales.
Constellation Hotels Holding Limited is a Luxembourg-based holding company, whose main focus is the long-term investment and development of real estate and hotels across the globe. It currently holds a portfolio of five-star hotels, commercial and office buildings in the main European capitals and the US.
1 $ equivalents have been converted at current exchange rates with final $ amounts dependent on the exchange rate on the date of completion.