LVMH splashes out on luxury hotels with $3.2 billion Belmond deal
By Dominique Vidalon and Inti Landauro PARIS (Reuters) - Luxury goods maker LVMH has agreed to buy Belmond , the owner of hotels including Venice's landmark Cipriani, for a total of $3.2 billion to raise its profile in upmarket hospitality. LVMH, the firm behind fashion labels Louis Vuitton and Christian Dior, already has hotels including the Cheval Blanc in the prestigious Courchevel ski resort in the French Alps, as well as Bvlgari hotels.
By Dominique Vidalon and Inti Landauro
PARIS (Reuters) - Luxury goods maker LVMH
LVMH, the firm behind fashion labels Louis Vuitton and Christian Dior, already has hotels including the Cheval Blanc in the prestigious Courchevel ski resort in the French Alps, as well as Bvlgari hotels.
The Belmond deal is LVMH's largest since it spent 4.3 billion euros in 2011 to buy Bvlgari and 6.5 billion euros in 2017 to gain full control of Christian Dior.
It will have a limited impact of its debt and boost 2018 earnings per share, before synergies by just 0.1 percent.
LVMH will "reach critical mass in the ultimate luxury hotel world with one single acquisition," finance chief Jean-Jacques Guiony told analysts during a call.
"The priority is to develop and improve the profitability of these exceptional brands and nurture complementarity with the LVMH group brands," he added
The acquisition will give it properties including the only hotel within the Machu Picchu citadel in southern Peru, Hotel Splendido in Portofino on the Italian riviera and the Copacabana Palace in Rio de Janeiro, moving LVMH further into the fast-growing "experiential" high-end travel and hospitality sector.
The transaction follows a wave of deals in the luxury hotels sector, including AccorHotels'
"While some investors may question the acquisition, which appears to lie outside LVMH group's core operations, we believe it is consistent with its long-term strategy focused on offering the consumer a full spectrum of luxury experience," Berenberg analysts said in a research note.
Guiony said the deal reflected LVMH's belief that "the future of luxury is in luxury goods and in luxury experiences".
It also pushes LVMH further into new luxury services at a time of growing concern that Chinese demand for high-end fashion and handbags will start waning amid worries about the health of the world's second-largest economy and potential damage from Wshington's protracted trade spat with Beijing.
LVMH said it would pay $25 per Belmond share, a 40 percent premium to Thursday's closing price.
The deal, expected to close in the first half of 2019, values Belmond's equity at $2.6 billion, and the group, including debt, at $3.2 billion.
Belmond posted earnings of $140 million before interest, taxes, depreciation and amortisation (EBITDA) on revenue of $572 million in the 12 months to Sept. 30. Half of revenue comes from Europe and 20 percent from North America.
At 1520 GMT, LVMH shares were down 0.9 percent at 253.45 euros in a weak European stock market <.FTEU3> while Belmond shares jumped 40 percent in New York to $24.74.
RBC Capital Markets analysts said the price of the deal - at 5.6 times recent sales and 22.9 times recent EBITDA - looked "optically high", but added: "Belmond owns a unique portfolio of trophy real estate assets, that will allow LVMH to increase its exposure to experiential luxury".
LVMH ended up paying a multiple of 19 times Belmond’s expected EBITDA for next year, according to Refinitiv data. Bigger hotel chains like Hilton and Marriott International
Belmond owns, partly owns or manages 46 luxury hotels, restaurants and train and river-cruise properties located in exotic and distinctive destinations worldwide.
(Reporting by Inti Landauro, Dominique Vidalon; additional reporting by Pascale Denis; Editing by Keith Weir and Mark Potter)
This story has not been edited by Firstpost staff and is generated by auto-feed.
By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States
BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.