Marriott International and South Africa’s Protea Hospitality Holdings have signed definitive agreements for the purchase by Marriott of Protea’s three brands and its management company.
Under terms of the agreements, Marriott will pay approximately $186 million, subject to normal closing adjustments.
The transaction is subject to receipt of certain third party and governmental consents, including exchange control approval from the South African Reserve Bank and competition approval from the South African Competition Commission and the Common Market for Eastern and Southern Africa (COMESA), and satisfaction of other customary conditions for transactions of this kind. Assuming these conditions are met, Marriott and Protea plan to close the transaction by 1 April.
Protea has 116 hotels with 10,148 rooms in seven African countries including South Africa. With this deal, Marriott will become the largest hotel company in the Middle East and Africa region, nearly doubling its distribution there to more than 23,000 rooms.
As part of the transaction, Protea Hospitality Holdings will create a property ownership company to retain ownership of the hotels it currently owns, entering into long-term management and lease agreements with Marriott for such hotels. The property ownership company will also retain a number of minority interests in other Protea-managed hotels. Marriott will manage approximately 45% of the rooms, franchise approximately 39% of the rooms, and lease approximately 16% of the rooms.
Marriott and Protea signalled their intent to enter into this transaction in November 2013. (See story here.)