PARIS, February 24, 2010 /PRNewswire-FirstCall/ -- The Accor Board
of Directors has approved the demerger of the Group's two core
businesses, Hotels and Services, and outlined the demerger process.
Employee representatives have already responded to the demerger
plan, which will be submitted to shareholders for approval at an
Extraordinary Shareholders Meeting on June 29, 2010. Demerger
rationale Today, both businesses are market leaders, with the
critical mass and international reputation to operate independently
in fast changing markets. With 4,100 hotels in 90 countries and
145,000 employees, the Hotels business is the European market
leader and a global hotel manager, with a unique foundation in the
midscale and economy segments. Accor Services which, after years of
strong growth, now operates in 40 countries with 5,600 employees,
has become the world leader in employee and public benefits and a
major provider of prepaid services, with more than EUR12 billion in
issue volume in 2009. Today, it is clear that: - Hotels and
Services leverage specific skills and expertise, and operate in
different business environments. - Backed by sufficient independent
financial resources, Hotels and Services will be better positioned
in today's increasingly competitive global marketplace. -
Separately, the two businesses, each with its own business model,
will attract a larger number of investors. With their own
operating, marketing and sales and legal structures, the two
businesses will be able to independently drive their own growth.
The demerger offers benefits for both businesses, because it will
make it possible to: - Complete two corporate mission projects, led
by dedicated management teams, strengthening employee pride in each
company. - Create two pure players, listed separately without any
capital ties, with targeted investors, and stronger visibility. -
Offer both businesses new opportunities for partnerships, strategic
alliances and financial transactions to fund future growth, in
particular through the ability to pay in shares. Demerger process
During the review of the potential benefits of the demerger,
initiated in late August 2009, the Liaison Committee between the
management teams and representatives of the Board of Directors met
several times to identify the best ways to ensure the future
success of the proposed two listed companies without any capital
ties between them. The resulting process was approved by the Board
of Directors on February 23, 2010. - Legal and tax issues Accor SA
will retain the Hotels business, as well as Lenotre, Compagnie des
Wagon-Lits and its stake in Groupe Lucien Barriere, while a new
company will be created for the Services business. The transaction
will be carried out as follows: - All of the Services subsidiaries'
shares will be contributed to a new company (after transferring
certain shareholdings in settlement of debt). - Shares in the new
company will be distributed to Accor SA shareholders. Shares in
Accor SA (retaining the Hotels business) and the new Services
company will be listed on the NYSE-Euronext Paris stock exchange.
Following the response at the beginning of this month from employee
representatives, the main steps remaining in the demerger process
are: - Meeting with bondholders. - A vote by Accor SA shareholders
at the Extraordinary Shareholders Meeting. - Determining the
capital structure The proposed debt allocation structure aims to
ensure that each company enjoys a rating and a capital structure in
line with its peer group, and to provide each one with the
resources necessary for its independent, long-term growth. The
Services business aims at earning a Strong Investment Grade rating,
which is a prerequisite for maintaining and expanding its
leadership in an industry where payment security is a key issue.
The goal of the Hotels business is to have an Investment Grade
rating by paying down all of its debt in 2011, using the proceeds
from the disposal of non-strategic assets (including the 49%
interest in Groupe Lucien Barriere) and certain hotel assets. Based
on these considerations, consolidated net debt, which stood at
EUR1.6Â billion at December 31, 2009, will be allocated as
follows: - Net debt of EUR1.2Â billion to Accor SA (Hotels). -
Net debt of EUR0.4 billion to the new Services company. Criteria
for setting the demerger timetable To determine the most
appropriate demerger timetable, the Board of Directors defined a
series of milestones: - Implementation of action plans, in
particular for the hotel property disposal strategy and the
disciplined management of expansion expenditure. - Launch of the
two corporate mission projects, led by each management team. -
Separation of shared teams, information systems and legal
structures. - Definition of the right capital structure and
allocation of the amount of debt appropriate to each company's
business model. - Commitment from Colony Capital and Eurazeo to
support the two companies (until January 1, 2012, as announced on
December 15, 2009). Now that these milestones have been
successfully reached, the Board has decided to carry out the
demerger in late June. An Extraordinary Shareholders Meeting will
be called for June 29, 2010 when shareholders will be asked to
approve the proposed demerger of Accor's two businesses. The
prospectus describing the details of the transaction and providing
investors with all the necessary information about the new listed
company will be published in May and filed with French securities
regulator AMF. Accor Services shares will start trading in early
July. The Two Proposed Equity Stories Hotels: A New Business Model
The world's leading hotel manager, Accor Hospitality, is committed
to becoming Europe's largest hotel franchisor and one of the
world's top three hotel groups by 2015, by leveraging five
strategic strengths: - A portfolio of powerful brands, aligned with
today's increasingly fragmented demand and ranging from luxury to
budget hotels. - Operating excellence, based primarily on an
outstanding team recognized for its hospitality expertise, a
comprehensive range of innovative services and a dynamic
distribution strategy. - A unique business model, based on speeding
up the low capital-intensive asset-right strategy underway since
2005, with the goal of operating more than 70% of the hotel base
under management contracts, franchise agreements or variable-rent
leases by 2013. Building this type of base will enable the Hotels
business to reduce its cyclicality, which will lead to more stable
cash flows and higher return on capital employed. To reach this
objective, 450 of the 1,600 hotels owned or operated under
fixed-rent leases at December 31, 2010 will change ownership
structure between 2010 and 2013.This disposal process will have a
cash impact of EUR1.6 billion and will reduce adjusted net debt by
EUR2 billion. In 2010 alone, the targeted disposals are expected to
represent EUR450Â million, of which 25% had already been
realized by the end of February. - A sustained expansion plan, with
the objective of opening 35,000 to 40,000 new rooms a year at
cruising speed, while reducing annual expenditure to EUR250 million
by focusing on asset-light expansion. Primarily deployed in the
Economy segment in Europe and in fast-growing countries, the plan
is already well underway with more than 100,000 rooms in the
pipeline as of end-2009. - A people-driven strategy, to strengthen
relationships with customers and partners, remain the hospitality
industry's "best place to work," and support our position as the
world's "leading hotel school." Proud of its business and its
expertise, the Hotels business is committed to: - Leveraging a
portfolio of powerful brands. - Delivering superior services. -
Creating innovative hotel solutions and related business models. -
Instilling a pioneering, entrepreneurial spirit. - Hiring and
retaining motivated, high-quality people. - Being successful both
globally and locally. Prepaid Services: A Growth Strategy
Positioned at the heart of a win-win relationship Because the
Services business offers close ties and effective solutions to
public authorities, companies, users and affiliates, it is
positioned at the heart of a win-win relationship that enhances
people's well-being and motivation and helps to improve the
performance of an organization. Its role is to act as an enabler
in: - Implementing economic and social policies, for public
authorities, institutions and unions. - Improving attractiveness
and performance, for companies. - Increasing purchasing power and
enhancing well-being and motivation, for users. - Increasing
revenue and customer loyalty, for affiliates. Fundamentals driving
strong growth in both developed and emerging markets The Services
business enjoys a wide variety of fundamentals - shaped by
demographics, socio-professional and sociological trends and
favorable government policies - that are capable of driving
long-term growth in both developing and emerging markets. At the
same time, the gradual shift from paper to electronic media is
enabling a deeper understanding of user needs and helping to speed
up growth by making prepaid services faster, easier to use and more
secure. A powerful vision In this growth environment, the Services
business is committed to being the world leader in employee and
public benefits and a major provider of prepaid services to help
improve the performance of an organization. In a business where
building volume is the key to creating value, Services has nine
sustainable growth drivers. These drivers are generating a virtuous
circle capable of delivering double-digit growth in operating cash
flow in "normal conditions" based on three pillars: growth in
operating revenue, economies of scale (after initial investments)
led by the migration from paper to electronic solutions, and a
higher float in value. A unique growth model that has demonstrated
its robustness - Strong growth in issue volume and revenue, which
rose respectively an average 10.5% and 12.3% a year between 2003
and 2009. - Strong growth in operating free cash flow, up an
average 15.1% a year between 2003 and 2009. - Low cyclicality.
Excluding exceptional external factors during the year, growth
would have exceeded 10% in 2009. - High sustainability, underpinned
by geographic, product, customer and media diversity. To ensure the
successful listing of a business offering growth, low-cyclicality,
low capital-intensity with a presence in developed and emerging
markets, the Services team can leverage such strong values as the
spirit of enterprise, innovation, performance, simplicity and
sharing. Conclusion All of the work accomplished as part of the
demerger process has created an internal dynamic that will enable
the project to be carried out under the best possible conditions.
These ambitious corporate mission projects, which are highly
motivating for employees, will give birth to two global market
leaders capable of creating shareholder value. Accor, a major
global group and the European leader in hotels, as well as the
global leader in services to corporate clients and public
institutions, operates in nearly 100 countries with 150,000
employees.It offers its clients over 40 years of expertise in two
core businesses: - Hotels, with the Sofitel, Pullman, MGallery,
Novotel, Mercure, Suitehotel, Adagio, ibis, all seasons, Etap
Hotel, Formule 1, hotelF1  and Motel 6 brands,
representing 4,000 hotels and nearly 500,000 rooms in 90 countries,
as well as strategically related activities, such as Thalassa
sea&spa, Lenotre and CWL. - Prepaid Services, with 32 million
people in 40 countries benefiting from Accor Services products in
employee and public benefits, rewards and motivation, and expense
management. DATASOURCE: Accor CONTACT: MEDIA CONTACT: Armelle
Volkringer, Senior vice president corporate, communications and
external relations, Phone : +33(0)1-45-38-87-52; Charlotte
Bourgeois-Cleary, Phone.?: +33-1-45-38-84-84. INVESTORS CONTACTS:
Eliane Rouyer-Chevalier, Senior Vice President , Investor Relations
and Financial Communications, Phone: +33-1-45-38-86-26; Solene
Zammito, Deputy Director, Investor Relations, Phone?:
+33-1-45-38-86-33.
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