Marriott International, Inc. and South Africa’s Protea Hospitality Holdings have announced that they have signed definitive agreements for the purchase by Marriott of Protea’s three brands and management company. Under terms of the agreements Marriott will pay approximately 2.02 billion rand, or approximately US $186 million at current exchange rates, subject to normal closing adjustments. The purchase price represents approximately 10 times anticipated pro forma 2014 calendar year EBITDA (earnings before interest, taxes, depreciation and amortization) excluding transaction costs.
Marriott and Protea plan to close the transaction on April 1, 2014. Marriott does not expect the transaction will have a material impact on its 2014 results.
Protea has 116 hotels with 10,148 rooms in seven African countries including South Africa. At closing, Marriott will become the largest hotel company in the Middle East & Africa region, nearly doubling its distribution there to more than 23,000 rooms.
As part of the transaction, Protea Hospitality Holdings will create a property ownership company to retain ownership of the hotels it currently owns, entering into long-term management and lease agreements with Marriott for such hotels. The property ownership company will also retain a number of minority interests in other Protea-managed hotels. At closing Marriott will manage approximately 45 percent of the rooms, franchise approximately 39 percent of the rooms, and lease approximately 16 percent of the rooms.
Marriott and Protea announced on November 7, 2013 their intent to enter into this transaction.
Editors Note: 20 March 2014. I am currently in South Africa with the intention of looking at examples of the Protea brand here. Personally I welcome this involvement by another major brand in the African market, growing variously up to 23% a year. Protea is geographically represented across the whole continent but is strongest in what was its home market of South Africa
