French hospitality giant Accor has announced a strategic move to repurchase 2.77% of its own shares from Chinese tourism group Jinjiang International. The action aligns with Accor’s previously announced €400m ($437.34m) share buyback programme for 2024.
The agreement involves acquiring 7 million shares for €275m ($300.67m), representing a 3% discount compared to the closing price on 11 March 2024.
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Following the repurchase and subsequent cancellation of the shares, Jinjiang International’s ownership in Accor will decrease from 7.96% to 5.33%. It will be subject to a 7-month restriction on selling any remaining shares through open market transactions.
The transaction offers a number of benefits to Accor and its shareholders. The repurchase is expected to lead to an increase of around 1.5% in Accor’s earnings per share.
By reducing the total number of outstanding shares, the value per remaining share held by existing investors also has the potential to increase. Accor maintains its financial flexibility to pursue future growth initiatives and shareholder returns.
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The transaction received unanimous approval from the Accor board of directors and involved an independent expert to assess its fairness. The expert concluded that the repurchase price is favourable for both Accor and its shareholders, with no negative impact on the company’s financial health.
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By GlobalDataWhile categorised as a related party transaction, it is deemed beneficial for Accor’s shareholders.
Expected to be finalised in mid-March 2024, the share repurchase will be executed through an off-market block trade.
Commenting on the agreement in a statement, Sébastien Bazin, chairman and CEO of Accor, highlighted the company’s confidence in its growth trajectory and commitment to shareholder value.
“The transaction demonstrates both our strong confidence in Accor’s growth potential and our commitment to returning cash to our shareholders. It also is a mark of the friendly and trusted relationships between Accor and Jinjiang International, which we thank for their continuous support.”
Qi Zhao, chairman of Jinjiang International, expressed satisfaction with the transaction and reiterated continued belief in Accor’s future prospects.
“We have been enjoying over the past years a trustful and respectful relationship with Accor,” he said, “and we are very pleased to have carried out this transaction. We continue to have strong confidence in the prospects of Accor.”
