Savoy Group finally falls to the Americans after 40-year tussle
Wednesday 08 April 1998
The deal marks the end of a takeover battle that has spanned more than four decades and sees the Wontner family finally give up control of the group. The sale of the Savoy comes after the group's main shareholders including Granada, the leisure and media giant, and the Wontner family thrashed out a deal to share the spoils.
Both sides had threatened to scupper the deal by demanding a greater share of the final sales proceeds. But in the end they managed to reach a compromise to push the sale through.
Blackstone is paying pounds 750,000 for each room in the chain of upmarket hotels which makes the acquisition one of the most expensive ever seen in the hotel industry. On top of the pounds 520m price, it has agreed to pay the Savoy's shareholders a dividend of pounds 6m. Together with the hotel group's debts Blackstone is paying a total of pounds 551m.
Blackstone is now looking at opportunities to exploit the group's powerful brand name by opening new hotels overseas.
Ramon Pajares, the Savoy's chief executive and the man credited with masterminding the refurbishment of the chain and returning the group to profit, will be kept on by Blackstone.
"I am delighted. This is the best possible outcome for all parties involved. This has removed the uncertainty surrounding the ownership of the group and gives us a chance to invest in the brand."
Blackstone described the deal as a one-off opportunity to acquire some of the best-known upmarket hotels in the world.
Stephen Schwarzman, president and co-founder of Blackstone, said: "The Savoy Group represents a unique opportunity ... to make a substantial investment in luxury hotels in one of the largest and most vibrant hotel groups in the world." The sale of the Savoy is a coup for Granada, which had been keen to sell its 68 per cent stake in the group ever since it acquired the holding as part of its takeover of Forte. It will receive pounds 310m of the sales proceeds, which compares to the pounds 183m the group was valued at when Forte was acquired in February 1996.
Granada has now raised almost pounds 2bn from disposals since acquiring Forte, compared with its original promise of pounds 1.3bn. It hopes to raise another pounds 500m from the sale of five other hotels including the Grosvenor House.
The Wontner family was originally holding out for a 6-to-1 conversion of the high voting B shares for every A share, which carry fewer voting rights. Granada, on the other hand, wanted a 2-to-1 valuation. The two sides finally agreed on a 4.5-to-1 valuation. The deal has been agreed by the board and most of the group's shareholders, despite some resistance from some members of the Wontner family.
Outlook, page 21
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