EUROPEAN hotel giant Accor is to acquire US economy hotel chain Red Roof Inns Inc at a cost to the company of £700m.
France-based Accor will spend the money on a tender offer to buy all outstanding shares of Red Roof at a price of £14.49 per share plus the taking on of Red Roof's debt.
Accor has received a commitment from the majority shareholders of the company to tender their combined 68.3% share at the offer price, a quarter more than the regular selling price.
The acquisition is part of the company's plan to strengthen Accor's economy hotel sector.
It already has Motel 6 in the States and plans to create a newly formed group for it and Red Roof Inns - called Accor Economy Lodging. The company says the two brands complement each other in terms of geography and match well in product mix, with Red Roof being economy and Motel 6 being budget.
Accor chairman of the management board and chief executive officer Jean-Marc Espalioux said: "The acquisition of Red Roof fits with one of the key elements of Accor's global strategy, the strengthening of Accor's worldwide leadership in the economy hotel sector.
"The economy sector is promising in both developed and emerging nations, is highly profitable and is less sensitive to economic cycles than other hotel sectors."
Accor will now operate 2,098 economy sector properties worldwide under the brands Formule 1, Etap Hotel, Ibis, Motel 6 and Red Roof Inns.
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