Hong Kong (Hong Kong SAR) – March 15, 2018 (travelindex.com) – InterContinental Hotels Group (IHG) announced that it has agreed to acquire a 51% stake in Regent Hotels and Resorts (Regent) for $39 million in cash. IHG will have the right to acquire the remaining 49% interest in a phased manner from 2026.
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InterContinental Hotels & Resorts. The acquisition of Regent is part of one of IHG’s new strategic initiatives focused on continuing to expand its footprint in the fast-growing $60 billion luxury segment.This initiative is supported by the creation of a new dedicated division to further enhance our capabilities in this area and will be funded by IHG’s efficiency programme, as outlined at our Full Year Results on 20 February.
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1. IHG is to acquire a 51% interest in a joint venture with Formosa International Hotels Corporation to acquire the Regent Hotels and Resorts brand and associated management contracts.
2. The 51% interest will be acquired for $39 million in cash, paid in three tranches of $13 million, the first upon the date of completion, the second in 2021 and the third in 2024. These amounts will be funded within IHG’s existing capital expenditure guidance of up to $350 million gross, and $150 million net, per annum into the medium term.
3. IHG has the option to acquire the remaining 49% stake in a phased manner from 2026. This will be via a combination of put and call options, is capped, and is based on a trailing twelve-month multiple of joint venture income, which based on our current projections would result in a payment of less than $100 million.
4. There are currently 6 hotels (2.0k rooms) in the Regent system. The annual fee income of those management contracts acquired by IHG will be offset by costs associated with the JV.
5. There are currently 3 hotels (0.9k rooms) in the Regent pipeline.
6. IHG expects to grow the brand to more than 10,000 rooms (40 hotels) over the long term.
7. The transaction is expected to close during the second quarter of 2018 upon satisfaction of certain customary conditions.
IHG®(InterContinental Hotels Group) [LON:IHG, NYSE:IHG (ADRs)] is a global organisation with a broad portfolio of hotel brands, including InterContinental® Hotels & Resorts, Kimpton® Hotels & Restaurants, Hotel Indigo® , EVEN® Hotels, HUALUXE® Hotels and Resorts, Crowne Plaza® Hotels & Resorts, Holiday Inn® , Holiday Inn Express® , Holiday Inn Club Vacations® , Holiday Inn Resort® , avid™ hotels, Staybridge Suites® and Candlewood Suites®.