The firms said the deal was worth S$1.72 billion (US$1.01 billion), made up of S$1.45 billion in cash with the balance being the take-over of Raffles' debt.
Singapore-government linked Raffles Holdings has a portfolio of 40 hotels in 33 destinations worldwide, including the Raffles Grand Hotel d'Angkor in Cambodia and the Swissotel Hotels and Resorts chain.
Singapore real estate giant CapitaLand is the majority owner of Raffles Holdings. The state-linked investment agency, Temasek Holdings, owns a 61% stake in CapitaLand.
Raffles Holdings said it had decided to off-load its hotel operations to take advantage of the favourable global climate for the sell-off.
"With the strong performance of the hotel business and the current favourable mergers and acquisitions environment in the global hospitality sector, Raffles Holdings has a timely opportunity to pursue the divestment option and unlock significant shareholder value," the company said.
It said the deal would also allow the firm to "retain a substantial amount of capital for re-investment into higher yielding assets for future business growth".
Colony Capital chairman and chief executive officer Thomas Barrack said acquiring the Raffles Hotel, Singapore's famous British colonial-era establishment that opened in 1887, was one of the highlights of the deal.
"We are honoured to become the custodian of one of the finest hotel chains in the world and a true national treasure of the Singapore people," Barrack said in the statement.
"We deeply respect the historical significance of the Raffles Hotel, Singapore, and we consider it our responsibility to protect that legacy."
Named after Singapore's founder, Sir Stamford Raffles, the Raffles Hotel is famous for the long list of writers and other luminaries to have stayed there during the British colonial era, and it remains an icon for the city-state.
Among its most famous guests during colonial times were Somerset Maugham, Joseph Conrad and Rudyard Kipling.
Colony Capital is a private, international investment firm that, according to its website, is "one of the worlds largest independent acquirers and financiers of real estate-related assets".
Since 1991, Colony Capital has invested more than US$13.9 billion in over 7,656 assets through various corporate, portfolio, and complex property transactions, its website says.
Amongs its assets are the Accor Hotel chain, the Savoy Hotel Group, the Costa Smeralda resort in Sardinia, Italy, and various Harrah's gaming venues in the US.
The two companies said the deal was still subject to shareholders' approval at a yet to be convened extraordinary general meeting.
CapitaLand, which has a 59.7% stake in the Raffles Holdings, has given an irrevocable undertaking to vote in favour of the sale.
A special dividend of 40 Singapore cents per share worth a total S$816 million will be paid to Raffles Holdings shareholders from the sale proceeds.
AFP
Publisher: Business Day
Source: Inet Bridge
