LVMH has agreed to acquire Belmond Ltd in a deal that values the operator of high-end hotels and New York’s 21 Club at US$2.6 billion.
The French luxury-goods company agreed to pay US$25 a share in cash for London-based Belmond, a 42 percent premium over Belmond’s closing price in the US on Thursday.
While LVMH has dabbled in hotels with a handful of boutique properties this would be a bigger step into the domain of high-end services, just as concern rises that Chinese demand for luxury goods is getting saturated.
The agreement 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 Inc and JPMorgan Chase & Co for a strategic review.
Belmond 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 percent 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 the Louis Vuitton brand and 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 LLC, Blackstone Group LP, KKR & Co and Ashkenazy Acquisition Corp, people familiar with the matter told Bloomberg in October.
The deal would 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 such as the Courchevel ski resort in the French Alps.
LVMH’s Bulgari unit 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.
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.
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