Accor Board Approves Plans To Split Into Two, Listed Cos

French hotels and services company Accor SA's (AC.FR) board of directors Tuesday voted to split the company into two separate, listed companies, ending years of speculation and pressure from some shareholders.

A wide majority of the 12-member board of the world's second-largest hotels group in terms of market capitalization after U.S.-based Marriott International Inc. (MAR), which met for most of the day Tuesday, voted in favor of the plans, with one vote opposed.

The French sovereign wealth fund, the FSI, which holds over 8.5%, voted against the plans.

The FSI, while not opposed to the idea, doesn't think it's a good time for a demerger because months, or even years, are needed to turn around the businesses before a split, according to a person close to the FSI.

Accor Chief Executive Gilles Pelisson, who took control of a reduced board as chairman in February, had made public plans to consider separating the businesses in August.

The highly profitable and fast-growing services, or vouchers division, sells lunch vouchers to corporate human resources departments seeking to distribute benefits to employees.

Those opposed to a demerging of the businesses argue the division's cash is needed to fund development of the hotels division, which has been hard hit during the economic downturn as consumers and businesses have cut back on travel. The contraction in the hotels business means the vouchers division's contribution to group earnings is expected to account for nearly 60% of group earnings before interest and tax this year, according to analyst estimates.

However, a split has been urged by some of the company's biggest shareholders--including U.S.-based private equity firm Colony Capital and European investment bank Eurazeo (RF.FR), which together own around 30% of the company--which argue they would get more value from two separate companies.

Accor's third-largest shareholder, U.S.-based investment firm Southeastern Asset Management Inc. Monday told Dow Jones Newswires that it favors a demerger and that it communicated its position to the board prior to Tuesday's vote.

-By Mimosa Spencer and Nathalie Boschat, Dow Jones Newswires; +33 1 40 17 17 73; mimosa.spencer@dowjones.com, nathalie.boschat@dowjones.com

Eurazeo Paris (PK) (USOTC:EUZOF)
Historical Stock Chart
From Jun 2024 to Jul 2024