Strategy Process Blog
- Carlson to add 30 hotels in India, ties up with PE fund
Carlson to add 30 hotels in India, ties up with PE fund
Sudeshna Sen
500 words
13 October 2007
The Economic Times
English
(c) 2007 The Times of India Group. All rights reserved.LONDON: Carlson Hotels, the US group that operates the Regent and Radisson chains, is planning to add 30 odd hotels in India in the mid-market segment over the next few years, and has set up a strategic alliance with a new US $1 billion private equity fund to target primarily in India and China.
Carlson Hotels Asia Pacific has plans to expand its Park Inn and Country Inn mid-market brands and economy brands in India in smaller cities and towns, and has tied up with Lotus Hotel Investment Fund, based in London, which is a new fund focused exclusively on the hotel sector in the high-growth markets of India, China and others in the Asian region.
Park Inn is an emerging hotel brand in the Carlson portfolio, with a focus on offering a relaxed environment in the economy category. Country Inns & Suites is one of Carlson's fastest growing, mid-scale hotel brands.
Martin Rinck, President and Managing Director of Carlson Hotels Worldwide - Asia Pacific said: "This is a great opportunity to combine the power of Carlson's world-class hotel brands with the proven expertise of the Lotus management team to maximise the huge potential we see in these markets". Mr Rinck said the expansion would cost $15m-$20m for each hotel, and the group has similar plans for China.
Lotus Hotel Fund is being set up as a Pan Asia specialist hotel fund with a focus on China, India and South East Asia. The alliance will take advantage of surging demand for world-class hotels in the major business and leisure markets across Asia. The alliance will focus primarily on strategic development opportunities in China and India, along with other key growth markets in the region.
The fund targets hotels for development and turnaround, and re-branding opportunities and will partner with global and regional brands to operate them under management contracts. The Fund comprises senior industry professionals with expertise in hotels, Asia, finance and business development. Mr Amarsi was previously CEO and Managing Director of the Singapore-based investment company BIL International Ltd.
Arun Amarsi, CEO of Lotus Hotel Investment Fund, commented: "We are in the process of launching this new fund and are delighted to have Carlson Hotels Worldwide as one of our brand partners to seize the exciting opportunities which we see in markets such as China and India, in particular".
Carlson Hotels Worldwide - Asia Pacific said that it already manages the largest portfolio of hotels of any international hotel group operating in India and is continuing to expand its presence in other key markets across the region, including China, where it has more than doubled its presence over the last four years.
Recent highlights include the opening of Regent hotels in Shanghai and Beijing. Carlson, besides its hotel brands, includes brands like TGIF, Carlson Wagonlit Travel, Regent Seven Seas Cruises, and Carlson Marketing Group.
- Swiss Resolution Merger Unresolved
LONDON - British insurance fund manager Resolution may have fought off a takeover bid by shareholder-rival Pearl, but its planned merger with Friends Provident still looks uncertain.
The world's largest reinsurance company, Swiss Re is joining forces with British insurer Standard Life to make a bid for the company, it was reported Friday.
Swiss Re traded down 1.70 Swiss francs (26 cents), or 1.5%, at 110.60 Swiss Francs ($17.21) in midday trading in Switzerland. Standard Life slipped by 5 pence (10 cents), or 1.7%, to £2.92 ($5.92) in London, while Resolution ticked up 4.63 pence (9 cents), or 0.7%, to £6.96 ($14.11). Shares in Friends Provident also rose by 1.50 pence (3 cents), or 0.8%, to £1.82 ($3.69) in London.
The news came just a day after Resolution said it had rejected a £6.60 ($9.36) a share bid by Pearl, its largest stakeholder on the grounds that it significantly undervalues the company, and insisted that it would be pressing ahead with a £8.6 billion ($17.6 billion) merger with life insurer, Friends Provident (other-otc: FRDPF - news - people )to create Britain's fifth largest insurance company. (See: " A Resolution In Sight ")
The deal with Friends Provident has proved controversial, with entrepreneur Hugh Osmond, who heads Pearl, arguing that Resolution shareholders would lose out from the deal. Both Pearl and Resolution are so-called zombie fund managers, specializing in taking over funds that are closed to new business, and deriving profits from the synergies that they can get from combining many smaller funds into larger ones, and running them down. Friends Provident on the other hand takes on new business.
An analyst who spoke on condition of anonymity said that the acquisition would make sense for Swiss Re, which has bought up a number of closed funds such as Resolution. He added that to succeed the bid would have to be "somewhere north of £7.00 ($9.93)" This would value Resolution above £4.8 billion ($9.7 billion), 12.8 times Resolutions earnings in 2006, though for Swiss Re with a market capitalization of 41.5 billion Swiss Francs ($31.5 billion) and Standard Life, with a market value of £6.4 billion ($12.9 billion) it would be a realistic option. Spokespersons for Swiss Re and Resolution said the companies did not comment on market speculation. In September Standard Life said it was considering making a bid for Resolution.
- Millers, Coors To Shake Up U.S. Beer Market
By DAVID KESMODEL and DEBORAH BALL
October 10, 2007; Page A1The U.S. beer business, battered by a shift in consumer tastes, faces a further shake-up with plans by SABMiller PLC and Molson Coors Brewing Co. to merge their U.S. operations.
With top sellers including Miller Lite and Coors Light, the two are taking aim at long-dominant Anheuser-Busch Cos. They would have about $6.6 billion in annual revenue and a roughly 30% market share in the U.S., second to Anheuser's 48%.
North America's largest brewers are struggling as consumers reach for small-batch "craft" beers, imported brews, wine and spirits. The number of barrels of beer sold in the U.S. is expected to grow only 1.5% this year, according to the Beer Institute, an industry group.
That has set off a merger rush to cut costs. SABMiller and Molson Coors, themselves products of recent mergers, said their tie-up in the U.S. will yield about $500 million in annual cost savings by the third year. The prospect helped drive up Molson Coors shares more than 10% on the New York Stock Exchange, while SABMiller was up 1.4% in London."This transaction is driven by the profound changes in the U.S. alcohol-beverage industry," said Pete Coors, who is vice chairman of Molson Coors and will be chairman of the new venture.
The deal, which is likely to face antitrust scrutiny, could increase pressure on Anheuser to pursue a merger outside the U.S., where it has a relatively small presence and where greater opportunities for growth lie. World-wide, Anheuser is the No. 3 beer maker by volume and market capitalization after InBev SA and SABMiller. An Anheuser spokeswoman declined to comment.
In a message to employees, Anheuser Chief Executive August A. Busch IV said the brewer must capitalize on the "significant transition confusion" that he predicted will occur when Miller and Molson Coors blend their U.S. operations. There will "likely be great concern within the SABMiller/Coors field sales and wholesaler organizations as people attempt to determine if they will have a role in this new structure," he said.
Mr. Busch said Anheuser employees "must not lose sight of the fact" that the new venture is "an attempt by these companies to better compete against us." Anheuser shares were down 0.9%.
From its roots in South Africa, the former SAB PLC has grown rapidly over the past decade by expanding into fast-growing economies such as China, Eastern Europe and Latin America. SAB acquired Miller Brewing Co. in 2002, but the U.S. business remained a weak link as the combined company struggled to combat Anheuser's power in marketing and distribution.
Under the agreement, SABMiller will have a 58% economic interest in the joint venture. Molson Coors will have 42%. They will have equal voting interests, and each company will have five representatives on the venture's board. Leo Kiely, chief executive of Molson Coors, is set to become CEO of the joint venture, with Tom Long, CEO of Miller Brewing, becoming president and chief commercial officer. The deal, subject to shareholder approval, is expected to close next year.
SABMiller and Molson Coors discussed a deal on and off for about a year, executives at both brewers said yesterday. The venture "creates a much more robust business, which has the ability...to be much more competitive no matter what the future may throw at us," said Graham Mackay, chief executive of SABMiller, in an interview.
Critical to the alliance, Mr. Mackay said, will be the opportunity for U.S. beer distributors to become "one-stop shops." He said distributors could save time and money by dealing with one company instead