S&P affirms Accor on $2.9 billion acquisition

Standard & Poor’s said it affirmed the BBB- long-term and A-3 short-term corporate credit ratings on Accor SA.

The outlook is stable.

The affirmation reflects an opinion that Accor’s agreement to acquire FRHI Hotels & Resorts for $2.9 billion in cash and shares does not affect Accor’s satisfactory business risk profile or its significant financial risk profile, S&P said.

The successful integration of the 155 hotels and resorts under the Fairmont, Raffles and Swissotel brands, of which 40 are under development, will moderately strengthen Accor’s business risk profile within the satisfactory category, the agency said.

This reflects added scale and diversification, particularly in the luxury and upper upscale segments, S&P said.

FRHI also will strengthen Accor in the key U.S. market, the agency added.

These strengths are offset by the inherent cyclicality of the lodging sector and Accor’s still-significant exposure to an asset-heavy, lease-based hotel operating model, S&P said.

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