AccorHotels agrees to buy half of SBE

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The SLS Baha Mar in Nassau, Bahamas.
The SLS Baha Mar in Nassau, Bahamas.

Seeking to expand its footprint in the U.S. luxury lifestyle segment, AccorHotels has signed a letter of intent to acquire a 50% percent in SBE Entertainment Group.

Founded in 2002 by Sam Nazarian, SBE is a New York-based company that develops, manages and operates lifestyle hotels, residences, restaurants and nightclubs. Its hotel brands include SLS, Delano, Mondrian, Hyde, The Originals and Redbury. 

The companies said AccorHotels will acquire the 50% of SBE's common equity held in part by Cain International for $125 million, while Nazarian will continue to own the remaining 50%.

In addition, AccorHotels will invest $194 million in a new preferred debt instrument that will be used to redeem all existing preferred units, also held in part by Cain International. AccorHotels' total investment in SBE will be $319 million. 

Sebastien Bazin, chairman and CEO of AccorHotels, said the investment "marks a new step in expanding AccorHotels' footprint in this fast growing segment in key U.S. cities such as Miami, Los Angeles or Las Vegas, and in other international destinations."

"The new luxury is all about exclusive experiences and incredible lifestyle concepts, and SBE brands have the perfect know-how that will complete perfectly the AccorHotels portfolio," he said.

The companies said the investment by AccorHotels will allow SBE to leverage AccorHotels' global hospitality platform while remaining an independent luxury lifestyle operator. SBE will continue to be led by Nazarian and will retain its headquarters in New York. 

"This long-term investment by AccorHotels provides SBE, its customers and hotel owners with greater depth and breadth around the world and supports our collective ambition to be the best lifestyle hospitality company in the market," Nazarian said. "Building on our acquisition of Morgans Hotel Group in 2016, this investment will further accelerate our growth both domestically in the United States and in new markets internationally, particularly in Europe."

By the end of 2018 SBE will operate 25 hotels, the majority in North America. It has 20 more in its global pipeline. 

AccorHotels is one of the world's largest hospitality companies, with more than 4,300 hotels, resorts and residences in 100 countries.

 

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