TOKYO • LVMH agreed to acquire Belmond in a deal that values the operator of high-end hotels and New York's 21 Club restaurant at US$2.6 billion (S$3.6 billion).
The deal, LVMH's largest transaction since taking full control of Christian Dior for more than US$7 billion last year, pushes the Louis Vuitton owner further into high-end services as concern rises that Chinese demand for luxury handbags and fashions is getting saturated.
The French luxury goods company agreed to pay US$25 a share in cash for London-based Belmond, a 42 per cent premium over Belmond's closing price in the United States on Thursday. The acquisition is one of LVMH founder Bernard Arnault's biggest, rivalling the purchases of Bulgari and Loro Piana.
The deal ends a four-month sale process as Belmond sought to take advantage of a strong hospitality market. The company said in August it hired Goldman Sachs Group and JPMorgan Chase & Co for a strategic review. Analysts speculated a sale could involve breaking up the company's assets, since its properties could be of value as trophies for ultra-wealthy investors, including sultans and oligarchs.
Chairman Roland Hernandez last month called the review "robust" and said management was encouraged by the interest potential bidders were showing. The company's shares have soared 58 per cent since Aug 8, at one point reaching their highest level since 2008. They closed at US$17.65 a share in New York trading on Thursday.
LVMH, owner of champagne maker Dom Perignon, is a surprise winner for Belmond. Among those weighing an offer for all or part of the company were KSL Capital Partners, Blackstone Group, KKR & Co and Ashkenazy Acquisition Corp, people familiar with the matter told Bloomberg in October.
The deal will expand the French company's high-end hospitality offerings. LVMH formed a hotel management group in 2010 to oversee its operations in the sector, which include properties under the Cheval Blanc name in locations like the Courchevel ski resort in the French Alps. LVMH's Bulgari jewellery brand has six hotels, including one in Shanghai that opened in July. It plans to open hotels in Moscow, Paris and Tokyo in the next four years.
Belmond, which used to be known as Orient-Express Hotels, owns or has stakes in more than 30 high-end hotels around the world, including Hotel Caruso on the Amalfi Coast in Italy and the Grand Hotel Europe in St Petersburg, according to company filings.
In addition to the 21 Club power restaurant in Manhattan, its stable of luxury properties includes a cruise line in France, a London-to-Venice train line and safari camps in Botswana.
Aside from the deal for the rest of Christian Dior, which LVMH already controlled, the French conglomerate had been relatively quiet on the mergers-and-acquisitions front since buying German suitcase-maker Rimowa in 2016.