Louis Vuitton Moet Hennessy (LVMH) is to Belmond, the company that owns the Reid's Palace Hotel in Madeira, among other properties.
The €2.8 billion deal is expected to be signed in the first half of 2019, subject to approval by Belmond’s shareholders and clearance from competition authorities.
LVMH is offering $25 a share, about €21.9, for Belmond, a 40-year-old company that operates in 24 countries with 46 hotels, cruise ships, trains and restaurants.
In the 12 months to September 2018, Belmond made a €123 million pre-tax profit from a turnover of €503 million.
Christian Dior SE is the main holding company of LVMH, owning 40.9% of its shares, and 59.01% of its voting rights. Bernard Arnault, majority shareholder of Dior, is Chairman and CEO of both companies.
The offer for Belmond will give Arnault the Cipriani hotel in Venice, Copacabana Palace in Rio de Janeiro, Grand Hotel Europa in St. Petersburg, Maroma Resort & Spa in Mexico, Hotel das Cataratas in Iguaçu, Brazil, and Cap Juluca in Anguilla.
Roland Hernandez, Chairman of Belmond, said that "after a strategic review, management concluded that this transaction with LVMH provides attractive and certain value to our shareholders as well as an exciting way forward with a group that values the irreplaceable assets and the strong management team of Belmond."
Bernard Arnault noted that Belmond's assets and, "its innovative services, excellence in execution and entrepreneurship are in line with the Group's values and complement our own activities with the Cheval Blanc and Bvlgari hotels," concluding that "this acquisition will significantly increase LVMH's presence in the hospitality world."
Reid’s Hotel, standing to the west of Funchal Bay, opened as the New Hotel in the late 1890s and later became the New Palace Hotel, then Reid's Palace or just "Reid's". The hotel was acquired by Orient-Express Hotels Ltd., which changed its name to Belmond Ltd. on 10 March 2014. At that time the hotel changed its name to Belmond Reid's Palace.
Reid's Palace was the vision of William Reid, a Scotsman who dreamed of building a majestic hotel in Madeira away from the winter chills of northern Europe.
William Reid, the son of a Scottish crofter, arrived in Madeira in 1836 and developed a business of hiring out quintas to wealthy invalids, moving on to the hotel idea but died before Reid’s was completed.
Reid’s two sons brought their father’s project to fruition and the doors to Reid's Palace opened in November 1891, coinciding with the opulence of the Edwardian era and the golden age of Belle Époque.
