Accor Split Receives ‘Unwavering’ Support, Chief Says (Update1)

Dec. 16 (Bloomberg) -- Accor SA’s plan to split off its service-voucher unit has the “unwavering support” of the lodging company’s three biggest shareholders, according to Chief Executive Officer Gilles Pelisson.

Investment funds Colony Capital LLC and Eurazeo pledged to retain their stakes in the separated voucher company until at least January 2012, while Memphis-based Southern Asset Management will continue as a “long-term shareholder” in the unit, Pelisson said in an interview on BFM radio. Between them, the investors own more than a third of Paris-based Accor’s shares.

Accor’s 12-member board approved the plan to separate the voucher unit from Europe’s largest hotelier yesterday, marking a victory for Colony and Eurazeo. The split had been opposed by former Chairman Serge Weinberg and five former independent board members, who quit in February in protest at the funds’ increasing control over the company. Colony and Eurazeo should have paid a premium to gain a controlling stake, the directors had said.

All board members apart from the representative of France’s sovereign investment fund voted for the split, Accor said yesterday. The directors asked management to come up with a detailed plan for the voucher division by the end of 2010.

The unit, valued by Morgan Stanley analyst Vaughan Lewis at 4.8 billion euros ($7 billion), is more profitable than Accor’s hotels and reports faster revenue growth. Pelisson, backed by Colony and Eurazeo, argued that the unit would have a greater value in the market if listed as a separate business.

Hotels Weakened?

Colony and Eurazeo are Accor’s largest investors, together owning about 30 percent of its shares. Southern Asset Management controls a 6 percent stake in the hotelier.

The split may weaken Accor’s lodging division, which is more exposed to economic cycles and has relied on the voucher unit for cash, Morgan Stanley’s Lewis said.

“Together with a highly volatile profit stream, we think that the hotels have limited capacity to support additional external debt,” Lewis said. “The division will need to embark on a significant restructuring process, or raise additional capital if it is to be an attractive standalone investment.”

Accor fell as much as 2.9 percent in Paris trading and was down 79 cents, or 2.1 percent, to 37.36 euros at 12:33 p.m. The stock has gained 6.4 percent this year.

Accor still needs to win the support of shareholders in May before it can proceed with the split. The service-voucher unit generated 978 million euros in sales last year, or about 13 percent of Accor’s revenue, while it accounted for 40 percent of profit. The unit’s sales in the first nine months of 2009 fell 0.8 percent, beating the 9.9 percent drop in hotel revenue.

Vouchers are a popular form of employee compensation in Europe and Latin America, where workers can exchange them for food or services such as child care and cleaning services.

To contact the reporter on this story: Ladka Bauerova in Paris at lbauerova@bloomberg.net.

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net.