LVMH to Acquire Belmond

LVMH Acquires Belmond


LVMH Will Acquire Belmond in a $3.2 billion deal. LVMH owns luxury brands such as Louis Vuitton, Bulgari, Givenchy, Marc Jacobs, Dom Perignon, Krug, Dior, Moët & Chandon and many others. Currently its sole luxury hotel brand is Cheval Blanc, with three current properties (Cheval Blanc Courchevel, Cheval Blanc Randheli in the Maldives, and Cheval Blanc St-Barth Ile de France, as well as Cheval Blanc Paris in development, its opening pushed back to 2019.

Belmond, on the other hand, is solely a luxury travel brand, although in addition to its 34 hotels, it also operates 7 iconic luxury trains such as the Venice Simpleton Orient Express (Orient Express is what Belmond used to be called), river cruises in France and Myanmar, and 3 safari lodges in Botswana. I'd say that Belmond has some fantastic properties and experiences in amazing locations, but is also one of the more uneven luxury travel brands, with significant variation in property and service quality. For that reason, I'd be shocked if LVMH attempts to rebrand all Belmond properties as Cheval Blanc, as it would just lead to disappointment among repeat Cheval Blanc guests. Perhaps LVMH will keep the Belmond brand intact, as another travel brand alongside its more luxurious Cheval Blanc hotels and resorts.

LVMH stock is down 1.46% at time of writing (while Belmond's is up over 40%), which isn't surprising given the enormous premium LVMH paid: at $25 a share, over double the price of Belmond's share price in early August, before the group announced it was open to acquisition offers. The rich acquisition price reflects the steep competition LVMH encountered from private equity bidders KKR and Blackstone, as well as Hilton Worldwide and sovereign wealth funds.

The deal is anticipated to close during the 1H 2019, pending shareholder and regulatory approval.

What is your favorite Belmond hotel or experience you've had?

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