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LVMH to acquire hotel group Belmond in $3.2 billion deal

The French luxury goods conglomerate has agreed terms with high-end hotel group Belmond to acquire it in deal that will see the company attempt access the ‘experiential’ market.

LVMH Moet Hennessy Louis Vuitton Moët Hennessy Louis Vuitton (LVMH) announced on Friday that it will acquire luxury hotel group Belmond in a deal valued at $3.2 billion.

LVMH will acquire the business for $25 a share in cash, with the luxury goods company looking to enter the ‘experimental’ market which has seen strong growth in recent years as consumer spend less on material items and more on high-end experiences like travel, hotels and food and wine.

Belmond delivers unique experiences to discerning travelers and owns a number of exceptional assets in the most desirable destinations,’ LMVH Chairman and CEO Bernard Arnault said.

‘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,’ he said.

‘This acquisition will significantly increase LVMH’s presence in the ultimate hospitality world,’ he added.

LMVH looks to keep pace with evolving luxury market

LMVH’s acquisition of Belmond is part of a wider strategy by the luxury goods company to diversify its revenue streams and retain customers in a market where tastes change at an increasingly fast pace.

Over the last decade, LMVH has broadened its footprint, expanding its travel retail and moved forward with several luxury hotels and spas.

In 2017, the global luxury hotel market is valued at around $83.1bn and is forecast to grow at a compound annual growth rate of 4.3 per cent to reach $115.8bn by 2025, according to Grand View Research, a consulting firm.

‘Today’s announcement is the result of the strong execution of our strategic vision that builds on our pioneering legacy and is an exciting development for all stakeholders, including our employees,’ Belmond President and CEO Roeland Vos said.

‘We are confident that, as part of LVMH’s world-class family of brands, Belmond’s ability to deliver timeless, one-of-a-kind luxury experiences will reach new levels.’

Belmond’s portfolio

Established over 40 years ago with the acquisition of Hotel Cipriani in Venice, Belmond owns and operates a global collection of exceptional hotel and luxury travel adventures in some of the world’s most inspiring and enriching destinations.

The company operates in 24 countries with its unique and distinctive portfolio of 46 hotel, rail and river cruise experiences.

‘Following a strategic review that attracted broad and deep interest from a wide range of real estate and lodging companies, sovereign wealth institutions and other financial buyers around the world, the board has concluded that this transaction with LVMH provides compelling and certain value for our shareholders as well as an exciting path forward with a group that appreciates Belmond’s irreplaceable assets and strong management team,’ Belmond Chairman Roland Hernandez said.

Belmond’s iconic properties include hotels like Hotel Cipriani in Venice, Hotel Splendido in Portofino, Copacabana Palace in Rio de Janeiro, Le Manoir aux Quat’Saisons in Oxfordshire, Grand Hotel Europe in St. Petersburg, Maroma Resort & Spa in Mexico, Hotel das Cataratas in the Iguassu National Park in Brazil, and Cap Juluca in Anguilla.

Legendary trains, such as the Venice Simplon-Orient-Express and Belmond Royal Scotsman and exceptional cruises such as Belmond Afloat in France fleet and Belmond Road to Mandalay, complete a portfolio that offers extraordinary experiences with curated activities and an understated personal service to a globally-diverse, highly refined customer.

The Belmond transaction is expected to complete in the first half of 2019.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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