Raffles acquires Swissotel brand

The Swissair group is selling its chain of luxury Swissotel hotels

In this story: Deal a 'compelling strategic fit' Company selling stake in Singapore property RELATED STORIES, SITES

HONG KONG, China -- Raffles Holdings Ltd will buy Swissotel Holding AG for $242.7 million (S$439 million), giving its property portfolio a more global flavour.

The deal with Swissotel parent Swissair Group is to be completed by May 31.

It will give Raffles ownership of the Swissotel brand and trademarks, and management contracts for 23 hotels.

They include six majority or wholly owned hotel properties and minority interests in three hotels.

The acquisition would also meet Raffles' objective of managing 12,000 rooms by the end of 2003, and would strengthen its grip in the Middle East and Mediterranean

It would also expand its foothold in Europe and North America.

Deal a 'compelling strategic fit'

Raffles Holdings chief executive Richard Helfer called the deal "a compelling strategic fit on terms that are consistent with our financial objectives."

He said the price was attractive compared to investment, other comparable transactions, and Raffles' cost of capital.

Raffles will increase its portfolio to 13,457 rooms and 39 hotels in 34 destinations.

Under the deal, Raffles will assume Swissotel's debt of $71.8 million (122 million Swiss francs), which would increase Raffles' debt load by 77 percent.

Raffles said it would fund the balance of the acquisition with a multi-currency facility totaling $170.9 million (S$309 million).

Company selling stake in Singapore property

The company intends to repay the borrowings with part of the proceeds from its sale of a 55 percent interest in Raffles City properties.

Raffles beat three other bidders for the Swissotel group.

Helfer said the deal should add to Raffles' earnings before accounting for integration costs of $2.9 million (S$5.3 million) and amortization of $22 million (S$40 million) in goodwill.

Raffles expects to improve the results of the combined company by as much as $8.2 million (S$15 million) a year by 2002 through measures including the closing of Swissotel's New York headquarters and the addition of the company's Amrita Spa facilities to the Swissotels.

Raffles stock, 68 percent held indirectly by the Singapore government, was unmoved by the announcement.

The company had a profit of $44 million (S$79.6 million) on revenue of $186 million (S$336.3 million) last year. Swissotel had revenue of $118.9 million (202 million francs) last year.

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Raffles Holdings
Swissotel

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