Starwood, Lehman to acquire Le Meridien Hotels & Resorts

Le Méridien Hotels & Resorts today announced that affiliates of Lehman Brothers, the holders of much of the Le Meridien’s debt, and Starwood Capital Group Global LLC have advised the group that they have entered into a non-binding letter of intent to form a joint venture and have proposed that the joint venture acquire the owned and leased hotel portfolio of Le Méridien (with the exception of the Forte Village in Sardinia which would be acquired by an affiliate of Lehman).

Le Méridien Hotels & Resorts has also been advised that Starwood Hotels & Resorts Worldwide has entered into a non-binding agreement with the Lehman/Starwood Capital joint venture and pursuant to that agreement Starwood Hotels has proposed to acquire the Le Méridien brand, management and franchise business from Le Méridien. Starwood Hotels would also enter into management agreements for the 36 owned and leased Le Méridien properties to be acquired by Lehman and Starwood Capital Group with such hotels continuing to be operated under their current flags.

These proposals will be presented to the Board of Le Méridien as part of a recapitalisation plan for the group. Consummation of the transactions contemplated by these proposals would be subject to the execution of definitive agreements, regulatory approvals, confirmatory due diligence, consultation where appropriate with employee representatives, the agreement of other Le Méridien stakeholders and Board of Directors and other customary terms and conditions. Other terms of the proposals were not disclosed. 

Robert Riley, CEO of Le Méridien commented, “If completed, these arrangements would at long last provide for the consensual recapitalisation of the group. Le Méridien has a well-respected and unique identity with strong customer loyalty, and skilled, experienced and passionate employees. Its alignment with a robust multi-branded management company like Starwood Hotels should enable the Le Méridien brand and its hotels to thrive by enhancing revenue and accelerating growth. The joint venture with Lehman Brothers and Starwood Capital Group should provide a financially strong structure for the current owned and leased portfolio. Providing an independent ownership structure for the Forte Village should create new potential for this world famous property.”

The transactions and recapitalisation are anticipated to be completed in the third quarter of 2005. In the meantime, Le Méridien Hotels & Resorts will continue to be operated independently by current management.

London-based Le Méridien is a global hotel group with a portfolio of more than 130 luxury and upscale hotels in 56 countries worldwide. The majority of its properties are located in the world's top cities and resorts throughout Europe, the Americas, Asia Pacific, Africa and the Middle East. Last year Le Méridien opened 10 new hotels and 21 new properties are in the pipeline to open during 2005 and beyond.

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