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AccorHotels Agrees to Acquire 50% Stake in sbe

PARIS—AccorHotels and sbe Entertainment Group have signed a letter of intent and entered into exclusive negotiations for AccorHotels to acquire a 50% stake in sbe, further illustrating AccorHotels’s strategy to expand its offering in the luxury lifestyle hospitality segment.

AccorHotels will acquire the 50% of sbe’s common equity held in part by Cain International for $125 million. Sam Nazarian will continue to own the remaining 50% of sbe. 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.

This long-term investment will allow sbe to leverage AccorHotels’ leading global hospitality platform while remaining an independent luxury lifestyle operator, according to the companies. Sbe will continue to be led by its founder and CEO Sam Nazarian as well as its management team, while retaining its global headquarters in New York.

Nazarian said, “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. 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.”

For his part, AccorHotels Chairman and CEO Sébastien Bazin said, “[This] 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. We remain committed to providing all our guests with unparalleled service and always renewed experiences around the world.”

Through this investment, sbe plans to accelerate its international growth with expansion into new markets outside of the U.S., including priority growth markets in the Middle East and Latin America. The company’s pipeline includes projects in some of the most important global gateway cities such as Atlanta; Chicago; Washington, DC; Dubai; Mexico City; Cancun, Mexico; Tokyo and Los Cabos, Mexico.

By the end of this year, sbe will operate 25 hotels, comprising 7,498 keys with a majority in North America, 170 restaurants and entertainment venues in global destinations as well as new properties in the Middle East, Asia and Latin America. It currently has a further 20 hotels and residences around the world in its pipeline, as well as 59 stand-alone restaurants and nightlife venues. In addition, sbe has sold 1,500 branded residential units valued at $2 billion with over 2,500 units valued at $2.5 billion in its pipeline.

Through this partnership, AccorHotels will expand its current geographic footprint in gateway North American cities such Los Angeles, Miami, Las Vegas and New York. Additionally, sbe’s core millennial customer base will gain access to the AccorHotels platform.

With its global hotel development platform and presence in 100 countries, AccorHotels will play a key role in developing sbe’s luxury lifestyle hotel, restaurant and entertainment brands globally. sbe hotels will also be distributed on the AccorHotels distribution platform, be featured on Accorhotels.com and will be part of the AccorHotels loyalty program.

The transaction is subject to regulatory approvals. It should be completed by July 31.