Qataris move to snap up IHG’s Paris flagship hotel Le Grand

Qataris move to snap up IHG’s Paris flagship hotel Le Grand

 

[caption id="attachment_17301" align="alignnone" width="400"] (The world’s largest hotelier said it had received a binding offer for the historic InterContinental Paris, where notable visitors of the past included Russia’s last Tsar Nicholas II and British King Edward VII. (Photo courtesy of Wikimedia Commons))[/caption]

 

InterContinental Hotels Group is set to sell its flagship Le Grand hotel in Paris to Qatari-backed investor Constellation Hotels for $440 million, it said on Thursday, raising the prospect of more cash returns for investors.

 

The world’s largest hotelier said it had received a binding offer for the historic InterContinental Paris, where notable visitors of the past included Russia’s last Tsar Nicholas II and British King Edward VII, in a deal that will see IHG manage the hotel for up to 60 years.

 

The sale, which is not expected to complete until next year, continues IHG’s strategy of selling on its hotels and then managing them under contract.

 

The approach has seen the group return some $10 billion to shareholders since 2003, including a $750 million special dividend in May.

 

The price tag for Paris, which had a net book value of $342 million, was slightly low, however, according to Numis.

 

‘Trophy asset’

 

“The Le Grand is an iconic trophy asset and whilst the takeout multiple of 20 times earnings before interest and tax may seem generous, we consider the sale price to be marginally disappointing,” Numis analysts said.

 

Shares in the firm, which operates over 4,700 hotels, were down 1.3 percent at 2,247 pence at 1415 GMT, when London’s FTSE 100 index was down 0.2 percent.

 

IHG said it expected annual management fees for the InterContinental Paris, which opened in 1862 and has operated under the InterContinental brand since 1982, to be $5 million.

 

Constellation, which will spend 60 million euros on renovations, also bought IHG’s London Park Lane InterContinental and a 80 percent stake in its Barclay hotel in New York in 2013.

 

The move comes just days after activist investor Marcato Capital Management said it had hired investment bank Houlihan Lokey to advise it on strategy at IHG, three months after a report that the hotels operator had rebuffed a 6 billion pound takeover bid.

 

(Reuters, London)

 

(Al Arabiya News, 7 Thursday August 2014 The Roman)