LVMH Moët Hennessy Louis Vuitton SE on Dec. 14 agreed to acquire British high-end hotel operator Belmond Ltd., confirming earlier media reports.
The French luxury fashion group said it will pay $25 per Belmond share, representing an equity value of $2.6 billion in a deal with an enterprise value of $3.2 billion. The per-share price represents a more than $7 premium to the hotel operator's closing price Dec. 13.
The owner of luxury brands including Louis Vuitton, Céline, Givenchy and Fendi said the move will help the company grow its presence in the hospitality sector.
"Belmond delivers unique experiences to discerning travelers and owns a number of exceptional assets in the most desirable destinations," LVMH Chairman and CEO Bernard Arnault said in a statement. "Its heritage, its innovative services, its excellence in execution and its entrepreneurship resonates well with the values of the Group and is complementary to our own Cheval Blanc maisons and the Bvlgari hotels activities."
The report comes about four months after Belmond, formerly Orient-Express Hotels, launched a strategic review of its business, including a potential sale. The company's shares rose 37% shortly after the announcement.
The merger is expected to close by Oct. 31, 2019, but may be extended to Dec. 31, 2019, in the event that the required regulatory approvals have not been obtained.
Pursuant to the agreement, Belmond will be obliged to pay a $92.3 million termination fee in case the merger does not push through due to certain circumstances, such as Belmond's board changing its recommendation prior to the shareholder meeting or the company accepting a superior proposal. A termination fee will also be paid out if Belmond enters into an acquisition agreement with another company within 12 months of the company terminating its agreement with LVMH.
Belmond's properties include Hotel Cipriani in Venice, Copacabana Palace in Rio de Janeiro and Grand Hotel Europe in St. Petersburg. In addition to hotels, Belmond also operates restaurants and train and river cruise properties. As of February, the company operated 46 luxury properties.
The Wall Street Journal first reported the development Dec. 13, citing people familiar with the matter.