InterContinental Hotels Group has agreed to acquire a 51% stake in luxury hotel group Regent Hotels and Resorts.
The stake will be acquired for $39m (£30m) in cash, paid in three tranches of $13m, the first on the date of completion, the second in 2021 and the third in 2024.
IHG has the option to acquire the remaining 49% stake in phases from 2026. This would be via a combination of put and call options, is capped, and is based on a trailing 12-month multiple of joint venture income, which based on its current projections would result in a payment of less than $100m.
Regent has six hotels comprising 2,000 bedrooms and a further three hotels in its pipeline. The annual fee income of those management contracts acquired by IHG will be offset by costs associated with the joint venture.
IHG will bring Regent into its brand portfolio at the top end of the luxury segment and will accelerate its growth globally. IHG’s intention is to grow the brand from six hotels today to more than 40 hotels, comprising more than 10,000 bedrooms, in global gateway city and resort locations.
IHG has also announced that following an extensive refurbishment due to commence in early 2020, InterContinental Hong Kong will become a Regent Hotel in early 2021.
The acquisition of Regent is part of IHG’s strategic initiative to expand its footprint in the fast-growing $60bn luxury segment and will be supported by the creation of a new dedicated corporate division.
IHG chief executive Keith Barr said: “We see a real opportunity to unlock Regent’s enormous potential and accelerate its growth globally. In addition, by creating a dedicated luxury division, we will be bringing together some of the most experienced and respected people in the industry who will help drive our luxury offer, ensuring that our existing luxury brands continue to evolve and allowing us to bring in new brands such as Regent to enhance our brand portfolio.”
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