Marriott International has reached an agreement with the board of Elegant Hotels Group, which owns and operates seven freehold hotels on the island of Barbados, on a recommended all-cash offer for Elegant's portfolio.
Under the terms of the offer, each Elegant shareholder would be entitled to receive 110 pence per Elegant share. The offer values the entire issued (and to-be-issued) ordinary share capital of Elegant at approximately £100.8 million ($130.1 million based on £1:$1.29).
The offer price implies an enterprise value for Elegant of approximately $199 million based on Elegant’s total net debt of $68.9 million as of March 31 as set out in Elegant’s most recent half-year report for the six months ending March 31.
Elegant's seven hotels—Colony Club, Tamarind, The House, Crystal Cove, Turtle Beach, Waves Hotel & Spa and Treasure Beach—have a total of 588 rooms. The majority of Elegant properties are operated as all-inclusive resorts. In the year ended September 30, 2018 (latest figures provide), the company reported revenue of $62.9 million and EBITDA before non-recurring items of $19.7 million.
“There is a strong and growing consumer demand for premium and luxury properties in the all-inclusive category,” stated Arne Sorenson, president/CEO, Marriott International. “The addition of the Elegant portfolio will help us further jumpstart our expansion in the all-inclusive space.”
Simon Sherwood, non-executive chairman of Elegant, said the company's board of directors was confident in the brand's long-term prospects, but felt the offer represented “compelling value for our shareholders and a great opportunity for our employees to be part of one of the world’s leading hotel companies.” Marriott's interest, Sherwood added, is a “resounding endorsement” of the brand and of Barbados as a destination. “We are therefore unanimously recommending the offer to shareholders.”
Following the proposed acquisition, Marriott intends to renovate the hotels and would operate them as all-inclusive resorts under one or more of Marriott’s brands. In keeping with its asset-light strategy, Marriott indicated it intends to sell the hotels but wants to continue to manage them.
The proposed transaction is subject to certain conditions, including approval by Elegant shareholders.
Marriott earlier this year launched an all-inclusive platform with the goal of growing a portfolio of resorts in popular vacation spots. In August, the company signed contracts to manage five new-build, all-inclusive resorts in the Dominican Republic and Mexico, investing more than $800 million in the projects. Those resorts are expected to open between 2022 and 2025.