Home / Kingdom and Colony to buy Fairmont and Raffles

Kingdom and Colony to buy Fairmont and Raffles

US $5.5 billion all-cash transaction will create a global hotel company

It looks set to be the hotel deal of the year. Kingdom Hotels International (KHI), in partnership with Colony Capital, is set to acquire Fairmont Hotels & Resorts Inc., for the grand sum of US $5.5 billion, or $45.00 per share.

The all-cash transaction for 100% of Fairmont has already been approved by Fairmont’s board of directors, and looks set to complete, subject to regulatory and share-holder agreement, by the end of April.

The deal will see the combination of two of the world’s most prestigious hotel brands, and will also see both Raffles and Fairmont vying for market share in some of the Middle East’s leading markets, most notably Dubai. Raffles Hotels & Resorts, which also includes the Swissôtel brand and was bought out by Colony Capital in mid 2005, is set to open the Raffles Dubai in 2007.

Fairmont Hotels & Resorts, which also owns The Savoy in London and includes Delta Hotels in Canada, already operates The Fairmont Dubai, and has two operations currently under development on The Palm, Jumeirah.

“We are still in the process of determining what will happen, but, in essence, there are four brands being brought together under one umbrella. This will give us greater opportunities to grow and enhance the existing properties. The new company will be bigger, stronger and more global, with four well established brands,” John Johnston, executive vice president, Europe, Africa & Middle East, Fairmont Hotels & Resorts, told Hotelier Middle East.

“Dubai is one city that can support several properties and we felt very confident to have The Fairmont Dubai in its location in juxtaposition with the resorts on The Palm. Clearly, the Raffles property at Wafi City is one that will be complementary to these developments,” he added.

Prince Alwaleed bin Talal bin Abdulaziz Al Saud of Kingdom has a longstanding relationship with Fairmont, being the outright owner of a number of the chain’s hotel properties, as well as a long term share holder.

“With Prince Alwaleed we have made significant strides in Europe and the Middle East to grow the Fairmont brand, through the acquisition of The Savoy and The Fairmont Monte Carlo, and through the developments on The Palm, Jumeirah,” said Johnston.

Prince Alwaleed is confident that greater growth can be achieved, once the two brands are merged. “As one of Fairmont’s current shareholders and strategic partners, Kingdom has long recognised the company’s existing value and potential. Fairmont’s success is clearly attributable to the dedication and professionalism of its management and employees. We look forward to partnering with Colony and working with the Fairmont and Raffles management to take the combined companies to a new level of achievement,” he said.

Further Fairmont expansion is planned for the Middle East, including a hotel property on The Corniche in Abu Dhabi, slated to open in 2009, and discussions are underway for management contracts in Beirut, Doha and Bahrain.

Follow us to get the most comprehensive technology news in UAE delivered fresh from our social media accounts on Facebook, Twitter, Youtube, and listen to our Weekly Podcast. Click here to sign up for our weekly newsletter on curated technology news in the Middle East and Worldwide.

REGISTER NOW | Webinar Event | Security you can bank on – Safeguarding the Middle East’s financial sector

Presented in partnership with security and network specialist Cybereason, the second in the three part webinar series will bring together a panel of experts to discuss how banks and financial institutions are evolving their service offering while simultaneously staying one step ahead of the cyber criminals who seek to bring their operations crashing to the ground.