SYDNEY: Mantra Group Ltd on Thursday agreed to a A$1.18 billion (701.45 million pounds)buyout from French hotel company Accor SA, a deal which will create the biggest hotel group in Australia where tourism is rising sharply. AccorHotels has been on an acquisition spree that, in part, aims to support chief executive Sebastien Bazin’s goal of adding businesses that can complement its core hotel operations and offer more control of hotel distribution. This latest deal would give the combined group about 50,000 rooms – roughly 11 percent of Australia’s hotel market, according to IBISWorld statistics. Accor is offering A$3.96 per share, a 23 percent premium to Mantra’s last trade before the bid was initially announced on Monday. The offer price is more than double Mantra’s A$1.80 issue price when it listed in 2014. Bazin said in a statement that the takeover would “underpin our long-term growth in the Asia-Pacific region”. Accor, the world’s fifth largest hotel group with more than 540,000 rooms worldwide, has made expansion in the Asia Pacific region among its priorities, and it also wants to focus on building and acquiring luxury, lifestyle and resort hotels. Last year, it expanded by 80,000 rooms, around half through acquisition and half through organic growth. Shares in Sydney-listed Mantra rose 0.3 percent to around A$3.88, showing investor support for the deal but also some uncertainty about the possibility it may meet regulatory hurdles. “It’s within the bounds of fairness, given what the shares have done recently,” said Noel Webster, a portfolio manager at BT Investment Management, Mantra’s largest shareholder. “Our first reaction would be not to block it.” The merger needed clearance from the Foreign Investment Review Board and antitrust regulator the Australian Competition and Consumer Commission (ACCC), Mantra said. The ACCC expected the companies to file a “detailed submission” about the deal shortly, a spokesman said. The regulator previously said it would review any deal to decide whether to open a formal investigation. The transaction would be the second-biggest in Australia’s hotel sector, and the largest buyout of an Australian entity by French interests, according to Thomson Reuters data. Deutsche Bank, which has a ‘buy’ rating on Accor, said the deal fitted Accor’s general strategy and increased the likelihood of Accor concluding a sale of its so-called ‘Booster’ group of non-core assets, which is set to bring in around 4 billion euros. “Australia is one of the largest markets for Accor outside Europe,” Deutsche said in a research note. Published in Daily Times, October 13th 2017.