LVMH Enters Luxury Hotel Business With $2.6-Billion Belmond Acquisition

You may soon be able to stay at a hotel owned by Louis Vuitton.

Belmond LTD BEL shares were soaring Friday after news broke that the company will be acquired by LVMH Moet Hennessy Louis Vuitton SA ADR LVMUY.

What Happened

Belmon — a hospitality company that owns, partly owns or manages 46 luxury hotels, restaurants, trains and cruises — announced they have entered into a definitive agreement with luxury giant LVMH to be acquired for $25 per share, of $2.6 billion in equity value. 

Why It Matters

The purchase of Belmond immediately thrusts LVMH, the world’s largest luxury group, into the hospitality business with the acquisition of some of the world’s most luxurious hotels and restaurants.

“This acquisition will significantly increase LVMH's presence in the ultimate hospitality world," LVMH CEO Bernard Arnault said in a statement.

LVMH already owns some high-end properties like the Cheval Blanc and Bulgari hotel chains.

LVMH makes some of the most coveted luxury products in the world and is rising in popularity among millennials and Generation Z, but the company is also diversifying into luxury experiences with Friday's M&A deal.

Among the properties acquired: the 21 Club in New York, known as Donald Trump's favorite restaurant, and the Cipriani, a 96-room Venice hotel with Michelin star-rated restaurants. The venue hosted George Clooney’s wedding in 2014.

What’s Next

Belmond shares were trading up by more than 40 percent at the time of publication Friday. The deal is expected to close in the first half of 2019 and is subject to the approval of Belmond shareholders.

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Photo by Morn/Wikimedia.