France's AccorHotels has agreed to buy Movenpick Hotels & Resorts for 560 million Swiss francs ($567 million), as CEO Sebastien Bazin pursues his expansion drive in emerging markets.
Shares in AccorHotels climbed 1.5%, outpacing flat performances on the broader Paris and European markets, as analysts and investors welcomed the deal. Saudi Prince Alwaleed bin Talal's Kingdom Holding company has a 5.7% stake in Accor.
"Movenpick marks an acceleration towards its (Accor's) development in the luxury part of the sector, as well as the Middle East, Africa and Asia Pacific," said Roche Brune Asset Management fund manager Meriem Mokdad, whose firm has nevertheless decided not to own Accor shares at present due to the group's debt levels.
Analysts at UBS and Bernstein also said the deal looked positive, adding the price paid was reasonable. UBS kept a "buy" rating on Accor shares, while Bernstein has an "underperform" rating on the stock.
Previous acquisitions under Bazin, who took over in 2013, include Toronto-based Fairmont Raffles Hotels International, owner of London's Savoy Hotel, The Plaza in New York and the Raffles Hotel in Singapore.
"With the acquisition of Movenpick, we are consolidating our leadership in the European market and are further accelerating our growth in emerging markets, in particular in Middle East, Africa and Asia-Pacific," Bazin said in a statement.
Movenpick was founded in 1973 in Switzerland and operates more than 80 hotels with a strong presence in Europe and the Middle East.
AccorHotels said the deal would add to group earnings from the first year and it expects it to close in the second half of 2018.
AccorHotels' shares are up by nearly 10 percent so far in 2018, outperforming a fall of around 5% on the STOXX Europe 600 Travel & Leisure index.
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