Monday, 1 July 2019

NH Hotel Group formalises the integration of Minor International’s hotels in Portugal and Brazil into its operations

NH Hotel Group formalises the integration of Minor International’s hotels in Portugal and Brazil into its operations

In the wake of the takeover bid by Minor International in the last quarter of 2018, and as foreshadowed in its prospectus with regards to the search for a far-reaching transaction that would allow NH Hotel Group to operate the establishments run by the former in Portugal and Brazil, three enabling agreements have been reached. These agreements comply with the delimitation of preferential geographical regions for each group and the reciprocal use of their respective brands as encompassed in the framework agreement reached by both companies in February 2019.

The following agreements have been reached against the backdrop of the operation:

Minor International has agreed to sell three hotels in Lisbon to funds managed by Invesco Real Estate, which will simultaneously begin to be operated by NH Hotel Group under a long-term sustainable lease agreement with the new ownerIn parallel, NH Hotel Group has entered into an agreement with Minor International for the management of another nine of the latter’s hotels in Portugal and the provision of management advisory at its two establishments in Brazil

Leadership and Governance

The integration of the operation of two group’s hotels in Portugal will deliver leadership in that market and unlock operational and sales efficiencies via the NH Hotel Group’s platform in southern Europe, while reinforcing the Company’s current strategy of growth via management and sustainable lease formulaeIn line with best corporate governance practices, the agreement was arranged on an arm’s length basis and with the approval of NH Hotel Group’s highest governing bodies, following votes in which the directors representing Minor International did not participate
Firstly, Minor International has entered a binding agreement for the sale of three properties located in Lisbon to funds managed by Invesco Real Estate (the Tivoli Avenida Liberdade - 285 rooms -, Avani Avenida Liberdade -119 rooms- and Tivoli Oriente -279 rooms-), which will be leased immediately from the fund manager by NH Hotel Group. The three hotels, which have been recently refurbished, will be operated by NH Hotel Group foreseeably from the end of July under an extendible, 20-year sustainable lease agreement.

Elsewhere, and simultaneously, NH Hotel Group has reached a management agreement with Minor International covering another nine hotels operated under the Tivoli and Anantara Hotels & Resorts brands in Portugal, located in Vilamoura, Carvoeiro, Sintra, Coimbra, Lagos and Portimão.

Following the transaction, the combined portfolio of Minor International and NH Hotel Group in Portugal will consist of seventeen* 4- and 5-star hotels, giving them leadership of the segment in that country and consolidating an extensive offering at the upper end of the market. All of the hotels will benefit from NH Hotel Group’s experience and efficient operating and sales management in Europe, leveraging the Company’s business structure in the south of the continent.

Lastly, taking advantage of NH Hotel Group’s extensive presence in Latin America, the two groups have also signed a management advisory agreement covering Minor International’s hotel portfolio in Brazil, where it has two hotels with a total of 504 rooms.

Ramón Aragonés, CEO of NH Hotel Group, highlighted the important reinforcement implied by the addition of these hotels to the Group. “With this agreement, we are completing successfully and in record time an important milestone in our integration with Minor International. The transaction injects greater variety and quality into our footprint in southern Europe and Latin America and will allow us to accelerate our plans for growth and for leveraging our complimentary business profiles”.

The integration of these hotels into NH Hotel Group’s operations will add around €13 million to the Company’s annual EBITDA.

In keeping with best corporate governance practices, the three transactions entered into were arranged on an arm’s length basis, having been analysed and approved by the Board of Directors of NH Hotel Group, at the recommendation of the Audit and Control Committee, which has received external advisory. Note that the proprietary directors who represent Minor International on NH Hotel Group’s Board of Directors neither participated in the preparation of that report nor voted on the corresponding resolutions.  

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