AccorHotels digs in for defense against takeover bid

(AccorHotels Takeover)

China’s largest hotel company is coming hard after France’s largest.

Paris-based AccorHotels is reportedly searching out for an investor to stave off a takeover by Shanghai-based Jin Jiang International Hotels, which currently has an almost 16-percent stake in AccorHotels, a percentage it is looking to boost.

The French government could come to its rescue. Reports have surfaced that a number of French ministers are backing a plan for the government to take a stake in the company, as it tries to rebuff the foreign takeover.

AccorHotels also is believed to have approached China’s HNA Group, which earlier this year acquired Carlson Rezidor Hotel Group and is currently embroiled in a shareholder proxy fight over NH Hotel Group, as it faces joining the current M&A trend and potentially becoming part of a company to rival the combined Marriott International and Starwood Hotels & Resorts Worldwide.

AccorHotels has a joint venture with China Lodging, but is thought to have turned to HNA Group given its recent interest in the sector.

Legally Speaking

AccorHotels strategy to enlist another investor is due in part because of its lack of legal recourse. In 2014, the French government extended a 2005 decree to state that foreign buyers must get the support of the economy ministry when they planned to invest in French firms engaged in energy, transport, water, health or telecoms. Although AccorHotels could possibly sell a case for its role in transport, it is unlikely and difficult.

While AccorHotels is not itself a protected company, it is thought that the French authorities are eager to apply pressure to ensure that Jin Jiang limits its shareholding and voting rights for an agreed number of years, in return for a place on the board. While this keeps Jin Jiang at bay, it still gives it access to company strategy—strategy it may not wish rival Louvre Hotels Group, which Jin Jiang also owns, to be privy to.

Jin Jiang now has 15.6 percent of AccorHotels shares and, according to reports in the local press, is courting Colony Capital and Eurazeo to buy their combined 11.8-percent stake at EUR45 per share (at the time of writing, the shares were at EUR40.25, having risen over 3 percent on the rumors). It is understood that the pair will not sell out to Jin Jiang without the board approval from AccorHotels.

Jin Jiang began 2016 with a stake of 5.5 percent and rumors suggest that the company is now looking to up its stake to as much as 29 percent, which would trigger a public offer. There has, as yet, been no comment from Jin Jiang, which was expected to clarify its expectations after raising its stake in April.

While HNA is reportedly being courted, speculation suggests that AccorHotels CEO Sebastien Bazin is hedging his bets and has approached a group of Qatari investors.

Changes to outward-direct-investment rules in China have seen a rapid increase in the involvement of Chinese firms in the latest spate of M&A in the sector. This saw Marriott International’s merger with Starwood Hotels & Resorts almost derailed by insurance group Anbang, but could yet see the face of the sector changed permanently.