Nomura International's Principal Finance Group has agreed to buy the Le Meridien chain of upmarket hotels for a cash consideration of £1.9bn.
For the vendor, Compass Group, the deal is the concluding part of the disposal of the Forte Hotels division brands including Posthouse, London Signature and Heritage. Gross proceeds from the sale total £3.26bn.
The 146-strong Le Meridien group of four and five star hotels will be run by Grand Hotels (M) Acquisitions Company I Ltd, a company set up by Nomura.
The bank's team was lead by Guy Hands, who privately owns a number of hotels together with his wife and, by way of a string of acquisitons in the pub sector, previously made the bank the UK's largest pub land lord.
Nomura is now set to become a major player in hotels as well, intending as it is to merge the Compass assets with the Principal Group of hotels and London's Cumberland Hotel, which it bought earlier this year.
The planned merger will involve a refinancing by way of equity and debt. Nomura is contributing £227m of equity, whilst Royal Bank Private Equity is providing £100m, according to Financial News. Alchemy Partners, Abbey National Treasury Services and Le Meridien's chief executive Juergen Bartels also participated.
A leveraged loan package worth £2.4bn is being arranged by CIBC and Merrill Lynch. Lehman Brothers are providing a mezzanine tranche. Compass was advised by Dresdner Kleinwort Wasserstein and Salomon Smith Barney.
Hands, who is due to leave Nomura to set up his own private equity shop, recently told a tourism and hospitality conference that the UK's hotel industry was not up to international standards. “There are a number of sacred cows in the industry that are not really appropriate in the modern world”, he said, criticising the way UK hoteliers failed to look after and train their staff.