Elegant Hotels directors give thumbs-up to Marriott offer

Marriott International subsidiary International Hotel Licensing Company (IHLC) has reached an agreement with the board of Elegant Hotels Group on the terms of a recommended all-cash offer to be made by IHLC for the entire issued and to-be-issued ordinary share capital of Elegant, it was revealed on Friday.

Under the terms of the acquisition, each Elegant shareholder would receive 110p in cash per share, which valued the entire issued and to-be-issued ordinary share capital of Elegant at around £100.8m ($130.1m).

The companies said the offer price represented a premium of about 57.1% to the closing price of 70p per Elegant share on the last practicable date, and 56.8% to the average closing price per Elegant share of 70.15p during the three month period ended on the last practicable date.

They also said the offer price implied an enterprise value for Elegant of approximately $199.0mm, based on Elegant's total net debt of $68.9m as at 31 March as set out in its most recent half-year report for the six months ended 31 March.

The acquisition would apparently enable Marriott to expand its recently-announced all-inclusive platform, while offering additional leisure destinations to its approximately 133 million Marriott Bonvoy members.

Elegant’s directors, who had been advised by Liberum as to the financial terms of the acquisition, said they considered the terms of the acquisition to be “fair and reasonable”.

Accordingly, they said they intended to recommend unanimously that Elegant shareholders vote or procure votes in favour of the scheme at the Court meeting, and the resolutions to be proposed at the general meeting, as the directors had irrevocably undertaken to do in respect of their own beneficial holdings representing 16.75% of the Elegant shares in issue.

“The Board of Elegant Hotels is confident in the group's long-term prospects but believes that this offer represents compelling value for our shareholders and a great opportunity for our employees to be part of one of the world's leading hotel companies,” said Elegant’s non-executive chairman Simon Sherwood.

“The fact that Elegant Hotels has attracted the interest of a company of Marriott's calibre is a resounding endorsement of the outstanding quality of our properties, operations and people, and indeed of Barbados as a highly desirable destination.

“We are therefore unanimously recommending the offer to our shareholders.”

Arne Sorenson, president and chief executive officer of Marriott, added that there was a “strong and growing” consumer demand for premium and luxury properties in the all-inclusive category.

“The addition of the Elegant Hotels portfolio will help us further jumpstart our expansion in the all-inclusive space, while providing more choices on the breathtaking island of Barbados for our 133 million Marriott Bonvoy members.”

Tim Sheldon, president of Caribbean and Latin America at Marriott International, said his division was “very excited” about adding the “outstanding” Elegant Hotel properties to its Caribbean and Latin American portfolio.

“We have been incredibly impressed with the hotels and the staff and look forward to welcoming them and their guests to the Marriott family.”