IHG has agreed to acquire Kimpton Hotels & Restaurants for $430 million in cash; acquisition makes IHG the clear market leader in the boutique segment, the fastest growing segment in the industry.
Kimpton, which is the world’s largest independent boutique hotel operator and a sophisticated food and beverage operator, manages 62 hotels in the most attractive cities and resorts in the US with a further 16 hotels in the pipeline. It operates 71 hotel-based destination restaurants and bars.
Richard Solomons, Chief Executive Officer of IHG, commented, “Kimpton is a well-established and highly successful business that has built an industry leading position in the US. It has created a portfolio of world-class hotels and destination restaurants, and the distinctive and innovative Kimpton brand will fit perfectly into the IHG brand family. Adding Kimpton to our portfolio of preferred brands creates the world’s largest boutique hotel business.
The acquisition is another step in IHG’s well-established asset-light strategy of investing in high-quality growth, building on a strong track record of developing iconic global brands. We will use our scale, network of owner relationships, and powerful digital platforms to accelerate Kimpton’s growth both within the US and internationally.
The hugely talented Kimpton team will continue to be led by Mike DeFrino, currently Kimpton’s COO, and I am delighted to welcome all of Kimpton’s associates and owners to the IHG family. The culture and values of both companies are well aligned and Kimpton will bring a wealth of expertise and specialist skills to IHG.”
Mike Depatie, Chief Executive Officer of Kimpton Hotels & Restaurants, commented, "Kimpton is a unique business with a strong track record of excellence in everything from design and innovative hotel concepts to financial and operational performance. It also has enormous potential for growth, both in its home market of the US and globally. IHG is the ideal partner for Kimpton and has absolutely the right experience and specialist capabilities to help the business move to the next phase of rapid growth. Kimpton and IHG have many things in common, not least our shared values and approach to building brands. As an owner of a significant number of Kimpton hotels through our real estate investment funds, I am committed to developing additional Kimpton hotels and I look forward to seeing Kimpton go from strength to strength as part of IHG.”
Kimpton was established in 1981, and is the largest independent boutique hotel and restaurant business in the US. It manages 62 hotels (11.3k rooms) across 28 cities in the US in attractive urban and resort locations such as Boston, Chicago, Florida, Los Angeles, New York, San Francisco, Seattle and Washington D.C. There are a further 16 hotels in the development pipeline (3.0k rooms), of which 10 are under construction. Kimpton also operates 71 hotel-based destination restaurants, bars and lounges across the US.
Kimpton caters for a broad and varied range of guest needs, including ‘Mixing Business with Pleasure’, ‘Short Break Experience’, ‘Romantic Getaway’ and ‘Wellbeing’ at an upper upscale price point. It also has a well-established and sophisticated member loyalty programme, Kimpton Karma Rewards, which has approximately 1.6 million members.
The Transaction will be financed through existing cash resources and new debt facilities, and is expected to close during the first quarter of 2015 upon satisfaction of certain customary conditions, including Hart-Scott-Rodino anti-trust clearance and Kimpton shareholder consent.
For US tax purposes, the transaction constitutes an asset sale for both the vendor and purchaser, and IHG is entitled to amortise the assets acquired. It is anticipated that the relief associated with this amortisation will reduce future taxes by approximately $160m.
BofA Merrill Lynch acted as financial adviser to IHG.