Formosa International Hotels Corporation to acquire Regent Luxury Hotel Business From Carlson and The Rezidor Hotel Group AB
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Formosa International Hotels Corporation to acquire Regent Luxury Hotel Business From Carlson and The Rezidor Hotel Group AB
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Category: Worldwide - Industry economy -
Group or hotel buyout
This is a press release selected by our editorial committee and published online for free on 2010-04-16
Formosa has a long history with the Regent brand and plans to grow Regent with new luxury concept in key global markets
Carlson, a privately-held, global hospitality and travel company, and publicly-held The Rezidor Hotel Group AB today announced that they have entered into a definitive agreement with Formosa International Hotels Corporation (FIHC) under which FIHC will acquire the Regent luxury hotel business. The master purchase agreement for the transaction includes customary conditions, which are expected to be fulfilled within the next month.
The Regent brand is owned by Carlson and its subsidiaries, which globally operates and licenses the Regent brand, including hotels, residences and cruise ships. In 2003, Carlson expanded its relationship with Rezidor under a separate master franchise agreement to include the development rights for Regent in Europe, the Middle East and Africa. The acquisition by FIHC includes the sale of the global Regent brand and all associated intellectual property, the hotel management and lease contracts for properties in operation and under development, and the Regent Seven Seas Cruises license.
FIHC is the original owner of the Grand Formosa Regent Taipei, which was opened 20 years ago by Regent founders Robert Burns, Adrian Zecha (who later founded Aman Resorts) and George Raphael. Regent was the leader and trendsetter of the luxury hotel industry; it was the first to introduce the four-fixture bathroom and the villa concepts which have since become luxury hotel standards. Regent Taipei introduced the first hotel DFS Galleria (luxury duty-free shopping mall) in the world. As a long-time Regent owner, FIHC has a unique appreciation of the brand. FIHC has grown to become a leading luxury hotel operator with the original Regent concepts and values at its foundation.
Future Regent hotels will be based on the concept of mixed-use, lifestyle development that encompasses the finest hospitality, residential, and commercial components in prime urban and resort locations. Regent plans to return to gateway cities such as Hong Kong, Tokyo, Shanghai, New York, Beverly Hills, London, Paris, and Sydney. Pipeline hotels include exceptional projects in Abu Dhabi, Bali, Bangkok, Doha, Dubrovnik, Gurgaon, Kuala Lumpur, Maldives, Phuket, and Puerto Rico. FIHC plans to make significant investment to enhance the Regent Taipei/Galleria concept and to build the new Regent leadership team with the best talent in the luxury hotel industry. "We appreciate the wisdom of Carlson and Rezidor in choosing FIHC, who can focus on pure luxury and ensure the future success of Regent. Our mission is to build Regent into the most admired luxury hotel brand in the world that exceeds even the high expectations of Regent owners and guests," said S. Steven Pan, Chairman of FIHC.
"We are confident that Regent will thrive under the direction of Formosa," said Hubert Joly, President and Chief Executive Officer of Carlson. "The company's thorough knowledge of the brand and access to capital are vital to the continued development of this tremendous luxury brand. With this transaction, we will be able to focus our resources on growing our core brands, especially Radisson, Country Inns & Suites, and Park Inn, as outlined in our Ambition 2015 strategy."
Carlson recently announced Ambition 2015, a global growth strategy aimed at expanding its portfolio by at least 50 percent by 2015 to more than 1,500 hotels in operation. The strategy includes an investment program of up to USD 1.5 billion in Radisson to establish flagship hotels in key U.S. cities and upgrade the existing Radisson portfolio in North America.
Carlson, Rezidor and FIHC will work together to ensure a smooth transition. Transitional agreements are in place whereby Carlson will continue to provide reservations and other services to the existing Regent network and Rezidor will continue to provide management services for Regent Hotels in Europe, the Middle East and Africa and maintain their current relationship to hotel owners.
The transaction will provide Rezidor with a positive impact on cash flow and profit. Rezidor's share of the transaction proceeds amounts to a cash consideration of approximately MEUR 9.5. The sale of this part of Rezidor's business will have an annual positive effect of MEUR 2 to 3 on Rezidor's EBITDA in the foreseeable future.
"In addition to the positive impact on annual cash flow and net profit, this deal will also free up resources to improve our operations and accelerate the expansion of Rezidor's core brands. After a careful consideration, we came to the conclusion that Formosa provided an excellent fit to Regent's future. They are exclusively focussed on the luxury hotel segment, and are committed to growing the brand internationally," said Kurt Ritter, President and Chief Executive Officer of The Rezidor Hotel Group.
Otus & Co acted as a financial advisor to Rezidor and Carlson for this transaction.
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