LVMH's $3.2bn acquisition of Belmond

By Felix Bachetta (Wharton School) and Masem Abbas (UCL) - Date: 12/01/2019

Overview of the deal

  • Acquirer: LVMH

  • Target: Belmond

  • Estimated value: $3.2bn

  • Announcement date: 14th December 2018

  • Acquirer Advisor: Undisclosed

  • Target Advisor: Undisclosed

LVMH, world’s largest luxury group by revenue, announced a $3.2 billion acquisition of luxury hotel and travel company Belmond in December 2018, effectively valuing Belmond’s equity at $2.6 billion, at a price of $25 a share. The deal is expected to be completed in the first half of 2019, subject to approval from shareholders and regulators. The acquisition will grant LVMH control of 46 hotels, restaurants and luxury trains and cruises across 24 countries. LVMH, which owns brands such as Christian Dior and Louis Vuitton, saw off interest from several other potential bidders for the deal, including sovereign-wealth funds and buyout firms.

Acquiring the high-end hotel chain will grant LVMH access to a wide portfolio of luxury experience hotels, such as Hotel Cipriani in Venice and Le Manoir aux Quat’Saisons in Oxfordshire, adding to the French conglomerate’s lodging portfolio, currently comprising of the Cheval Blanc hotel chain and the Bulgari Hotels and Resorts. By pursuing this acquisition, LVMH hopes to benefit from the rising trend of experiential luxury, where consumers are shifting their preferences from purchasing luxury goods to seeking high-end experiences, be it through the consumption of gastronomy and wine, or by traveling.

Belmond delivers unique experiences to discerning travellers and owns a number of exceptional assets in the most desirable locations. This acquisition will significantly increase LVMH’s presence in the ultimate hospitality world. -Bernard Arnault, CEO of LVMH.

Company details (LVMH)

LVMH Moët Hennessy Louis Vuitton S.E. is a luxury products company. The company operates several business divisions including Wines and Spirits; Fashion and Leather Goods; Perfumes and Cosmetics; Watches and Jewelry; Selective Retailing. Some of its brands include Moët & Chandon, Dom Pérignon, Louis Vuitton, Marc Jacobs, Céline and Givenchy.

-Founded in 1923, headquarters: Paris, France

-Chairman & CEO: Bernand Arnault

-Number of employees: 128,637

-Market Cap: $127.216bn -EV: $156.458bn

-LTM Revenue: $50.419bn -LTM EBITDA: $12.330bn

-LTM EV/Revenue: x3.10 -LTM EV/EBITDA: x12.69

Company details (Belmond)

Belmond Ltd. is a hospitality and travel company operating and owning 46 hotel properties, river cruises, safaris, rail trips and restaurants throughout the entire world. Hotels account for an overwhelming majority of Belmond’s business, exceeding 80% of total revenue in fiscal 2018.

-Founded in 1976, headquarters: London, United Kingdom

-President & CEO: Roeland Vos

-Number of employees: 128,637

-Market Cap: $2.58bn -EV: $3.71bn

-LTM Revenue: $571.8mn -LTM EBITDA: $65.9mn

-LTM EV/Revenue: 6.31 -LTM EV/EBITDA: 54.77

Projections and Assumptions

Short term Consequences