The agreement involves the purchase of 100 per cent of Fairmont’s shares at $45 a share – a 28 per cent premium over the closing price on 4 November, when trading on the New York Stock Exchange (NYSE) was suspended. JP Morgan acted as financial adviser to KHI and Colony on the purchase. KHI has announced its intention to combine the Fairmont and Raffles hotel brands currently operated by Fairmont, which holds a portfolio of 120 hotels spread across 24 countries. A Raffles hotel is due to open in Dubai in 2007.
KHI is already a shareholder and strategic partner of Fairmont, having entered a joint venture in early 2005 to target Europe’s luxury hotel market (MEED 4:2:05). The company also owns stakes in Switzerland-based Moevenpick Hotels & Resorts and Toronto-based Four Seasons Hotels & Resorts. KHI is planning an initial public offering (IPO) of shares to fund further expansion (see Banking & Finance).
In another move by Saudi investors into the global hotel market, MBI International – owned by local businessman Mohammed bin Isa al-Jaber – has acquired the Scotsman Hotel Group (SHG) for £63 million ($112.1 million). SHG owns three boutique hotels in Edinburgh, Leeds and Paris.