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Paris-based LVMH, a luxury products company that owns the Louis Vuitton and Christian Dior fashion labels, agreed to acquire London-based Belmond and its portfolio of high-end hotels.
The deal reflects a belief at LVMH that “the future of luxury is in luxury goods and luxury experiences,” Jean-Jacques Guiony, the finance chief of LVMH, told stock analysts during a conference call.
LVMH, which acquired the Bvlgari hotel group in 2011, agreed to pay $3.2 billion for Belmond.
Belmond is the owner, co-owner or manager of 46 luxury hotels, restaurants, and train- and river-cruise properties. Among its best known hotels is the Belmond Cipriani Hotel in Venice, Italy.
Belmond’s properties also include the only hotel within the Machu Picchu citadel in Peru, the Cococabana Palace in Rio de Janeiro and Hotel Spendido in Portofino, a seaside village in northern Italy.
In a research note, analysts at Berenberg Capital Markets said the LVMH acquisition of Belmond would be “consistent with its long-term strategy focused on offering the consumer a full spectrum of luxury experience.”
LVMH agreed to pay $25 per share for Belmond, or 40 percent more than Belmond’s closing price on Thursday. The acquisition is expected to close in the first half of 2019.
The price LVMH agreed to pay is 22.9 times recent earnings from operations at Belmond, according to analysts at RBC Capital Markets.
Although the price is “optically high,” RBC reported, “Belmond owns a unique portfolio of trophy real estate assets that will allow LVMH to increase its exposure to experiential luxury.” [Reuters] – Mike Seemuth
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