Covivio has announced a significant move to consolidate its position in the hotel sector by acquiring an 8.3% stake in its subsidiary Covivio Hotels from Generali.

This deal, which represents the equivalent of €500m in assets and a nearly €300m capital increase, is set to be completed by April-end.

It will result in Covivio holding a 52.2% share capital in Covivio Hotels. Subsequently, the company will launch a mandatory public exchange offer for the remaining shares.

Covivio and Generali entered an agreement to contribute the 8.3% stake in Covivio Hotels held by Generali in exchange for new shares of Covivio.

The exchange ratio has been set at 31 Covivio shares for every 100 Covivio Hotels shares, ex-dividends for 2023.

Covivio CEO Christophe Kullmann said: “As a pioneer and leader in hotel real estate, today Covivio significantly reinforces its position in this dynamic and growing market.

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“This transaction allows us to continue the balancing of our portfolio between offices, housing, and hotels, and to strengthen the group’s equity.”

Covivio Hotels, a listed limited partnership on Euronext Paris, is currently 43.9% owned by Covivio and 53.5% by institutional investors: BNP Paribas Cardif, Crédit Agricole Assurances, Generali, Assurances du Crédit Mutuel, Sogecap and CDC.

The transaction is pending approval by the Contribution Appraiser and will be subject to the clearance of Covivio’s General Meeting on 17 April 2024.

An independent expert will be appointed by Covivio Hotels to review the financial terms of the offer, which is also awaiting approval from the AMF.

Covivio has stated that it does not plan to implement a squeeze-out after the offer’s completion.

The acquisition of Generali’s stake will enhance Covivio’s exposure to a portfolio of 313 prime hotels, predominantly located in key European tourist cities.

This will increase the hotel share in Covivio’s portfolio from 17% to 20%, potentially rising to 32% if 100% ownership is achieved post-offer.