French multinational hotel group Accor SA lodged an indicative and non-binding A$3.96 per share control proposal for Australian hospitality company Mantra Group Ltd.
In a statement, the target confirmed Accor's proposal, noting that the offer price is A$4.02 per share less compared with the dividend that it paid for financial year 2017, plus a potential special dividend.
Accor, which operates under the AccorHotels brand, is currently conducting due diligence as granted by Mantra. The Australian hotel operator said the process will help its board determine whether a transaction can be agreed upon based on the proposal, subject to various regulatory approvals and other conditions that are yet to be determined.
The Australian Financial Review reported that the A$1.2 billion offer represents a 23% premium to the A$3.23 per share Oct. 6 closing price of the target, which values Mantra at about A$1.17 billion.
If pursued, the merger of Australia's largest hotel operators could signal the formation of a hotel business that owns a roughly dozen brands, with more than 50,000 rooms across 300 hotels, the Oct. 9 report added.
Mantra sought the services of Highbury Partnership as financial adviser and Baker McKenzie as legal adviser to help it deal with the proposal.