NEW YORK, 31 January 2006 — Prince Alwaleed ibn Talal and Colony Capital will pay $3.9 billion to buy Fairmont Hotels & Resorts Inc. in a move to create an expanded international luxury chain, Fairmont said yesterday.
The joint offer by Prince Alwaleed’s Kingdom Hotels International and investment group Colony would combine the Fairmont name with the Raffles hotels, topping an offer by financier Carl Icahn that was rejected the company.
It reflects growing interest in the lucrative luxury lodging market. Earlier this month both Starwood Capital Group and Hilton Hotels Corp. launched new luxury hotel brands.
Joseph Greff, an analyst at Bear Stearns, said in a research note that the deal was not unexpected. “We believe Icahn’s tender offer ... was the catalyst for this transaction,” he said.
Fairmont, which is based in Toronto and owns more than 80 hotels in North America, Britain, Kenya and the United Arab Emirates, said it agreed to the deal under which the two investment groups will pay it $45 per share in cash.
The price marks a slight premium to Fairmont’s closing price on Friday of $43.82 on the New York Stock Exchange, but a hefty 28 percent premium over where the stock was trading in early November when the company was offered a buyout by Icahn.
Icahn, who accumulated about a 9 percent stake in the company, eventually offered $40 a share, or $1.19 billion, to buy 51 percent of the hotel chain’s shares, but was rejected by the board in December.
Colony and Kingdom Hotels have agreed to a deal that will combine Fairmont with the Raffles hotel group, including 23 Swissotels, and create an international luxury chain with 120 hotels in 24 countries.
Fairmont said the deal, which has been approved by the company’s board, is expected to close in the second quarter of 2006.
Last year, Colony Capital bought the hotel business of Raffles Holdings for $859 million, gaining Singapore’s landmark Raffles Hotel, several historic hotels in Asia, including the Raffles Grand Hotel d’Angkor in Siem Reap, Cambodia, and the Swissotel brand.
Colony’s assets include a baseball stadium in Japan, a French steakhouse chain, as well as European budget hotels. Past investments include London’s Savoy Group, New York’s Stanhope Hotel and the Aman resorts hotel chain in the US and Asia.
