LVMH Moët Hennessy Louis Vuitton S.E. entered into a definitive agreement to acquire Belmond Ltd. for $2.6 billion on December 14, 2018. LVMH is to acquire Belmond for $25 per Class A share in cash.
About Seller Company
Belmond Ltd. engages in the hotel and travel businesses. As of December 31, 2017, the company owned, invested in, or managed 36 deluxe hotels and resort properties in the United States, Mexico, The Caribbean, Europe, Southern Africa, South America, and Southeast Asia; 1 stand-alone restaurant in New York; 7 tourist trains in Europe, Southeast Asia, and Peru; 1 river cruise in Myanmar; and 1 canal boat business in France. Its portfolio of hotels includes 3,203 individual guest rooms and multiple-room suites. The company was formerly known as Orient-Express Hotels Ltd. and changed its name to Belmond Ltd. in June 2014. Belmond Ltd. was founded in 1971 and is based in Hamilton, Bermuda. It had LTM Revenue of $571M and LTM EBITDA Margin of 12.9x.
About Buyer Company
LVMH Moët Hennessy Louis Vuitton S.E. operates as a luxury products company. The company operates through Wines and Spirits; Fashion and Leather Goods; Perfumes and Cosmetics; Watches and Jewelry; Selective Retailing; and Other Activities business groups. The company offers champagnes, wines, and spirits under the Moët & Chandon, Dom Pérignon, Veuve Clicquot Ponsardin, Krug, Yquem Castle, Dom Perignon, Ruinart, White Horse castle, Mercier, Château d’Yquem, Clos Des Lambrays, Hennessy, Glenmorangie, Ardbeg, Belvedere, Chandon, Cloudy Bay, Terrazas de los Andes, Andes Horse, Cape Mentelle, Newton Vineyards, Numanthia Termes, Numanthia Bodega, Clos19, and Ao Yun brands. It also provides fashion and leather products under the Moynat, Louis Vuitton, Céline, Loewe, Kenzo, Givenchy, Thomas Pink, Fendi, Emilio Pucci, Marc Jacobs, Berluti, Nicholas Kirkwood, Loro Piana, Christian Dior Couture, Edun, and Rimowa brands. As of December 31, 2017, the company operated 4,374 stores worldwide. The company was incorporated in 1923 and is headquartered in Paris, France. It had LTM Revenue of $52B and LTM EBITDA Margin of 23.1x.
Transaction Rationale and Consideration
The transaction rationale basically is for LVMH to increase its presence in the ultimate hospitality world.
Target company was valued at $3.2B enterprise value with an equity value of $2.6B resulting in a per share valuation of $25 which represents a 41% premium. Implied Enterprise Value/LTM Revenue multiple was 5.7x, Implied Enterprise Value/LTM EBITDA multiple was 44.1x and Implied Equity Value/Book Value multiple was 3.9x. It is a 100% acquisition.
The deal is subject to the approval of Belmond’s shareholders and clearance by the relevant competition authorities including Brussels, Mexico, Botswana, Brazil, Russia. The transaction is expected to complete in the first half of 2019. J.P. Morgan acted as financial advisor to Belmond Ltd. Michael Aiello, Sachin Kohli and Michelle Sargent of Weil, Gotshal & Manges LLP acted as legal advisor to Belmond.
Author: John Oyadougha