Hospitality company Marriott International has signed a letter of intent with Protea Hospitality Holdings to acquire Protea Hotels brands and its management business.
Protea operates or franchises 116 hotels across three brands, with 10 184-rooms in South Africa and six other sub-Saharan African countries. The transaction will nearly double Marriott's distribution in Africa to more than 23 000 rooms.
Protea Hospitality Group CEO Arthur Gillis said Protea Hotels had never actually been on the market but both parties had begun talking about the unrealised potential in Africa.
"A reasonable conclusion was drawn that aligning ourselves with a global hospitality giant such as Marriott ensures we can realise the Protea Hospitality Group's full potential.
"The intention is for the brands and the people who are part of the Protea Hospitality team to remain," said Gillis.
As part of the transaction, Protea Hospitality Holdings will create a property ownership company to retain ownership of the hotels it currently owns (and enter into long-term management and lease agreements with Marriott for these hotels). It will also retain a number of minority interests in other Protea-managed hotels. At closing, Marriott will manage about 46 per cent of the rooms, franchise 40 per cent and lease 14 per cent.
While the proposed terms of the transaction have not been disclosed, both parties have stated that they plan to sign definitive agreements by the end of the year and the transaction could close in the first quarter of 2014.
Marriott International Inc President and CEO Arne Sorensen said the company was attractive for a number of reasons, but particularly because of its reach across sub-Saharan Africa, its operating platform and its people.