Colony & Eurazeo Raising Accor Stake

PARIS (Reuters) – U.S. property company Colony Capital and investment group Eurazeo said they plan to raise their stakes in Accor (ACCP.PA: Quote, Profile, Research) to a total of some 30 percent, boosting shares in the French hotels and services group.

Colony said on Monday it would raise its stake in Accor, one of the world's top hotel operators with brands including Novotel and Ibis, to around 20 percent, while Eurazeo (EURA.PA: Quote, Profile, Research) would lift its stake to around 10 percent and seek boardroom representation.

Some analysts said the move could increase pressure on Accor's management to make disposals to boost the group's share price.

“This announcement leaves one to believe that Accor's management is under increasing pressure to extract value … and this could lead to new sales of assets,” CM-CIC Securities said in a research note.

CM-CIC Securities kept a “buy” rating on Accor shares and a price target of 68 euros.

Accor said it wanted a guarantee from Colony and Eurazeo they would not seek control of the company and would set up a shareholder stability pact.

Accor shares rose as much as 4 percent to an intraday high of 56.30 euros, their best level since mid-December, before edging back to trade up 3.6 percent at 56.10 euros.

That gave Accor a market value of around 12.8 billion euros ($19.3 billion) — greater than U.S. rivals Marriott International (MAR.N: Quote, Profile, Research) and Starwood Hotels (HOT.N: Quote, Profile, Research).

“Colony Capital and Eurazeo's increased stakes demonstrate their confidence in the management team and its strategy, the group's potential for value creation and the strength of its assets,” the companies said in a statement.

The two said they did not intend to take control of Accor.

Colony has been building up its presence in Accor over the last year and the property company already held a 10 percent stake in the French group.

Accor in February posted a 76 percent jump in full-year net profit although last month the company reported a 5.1 percent fall in first-quarter sales due to the weakness of the U.S. dollar against the euro.

Accor shares have risen around 2 percent since the start of 2008, outperforming a 10 percent fall in the CAC-40 and a 13 percent decline in the DJ Stoxx European travel and leisure index .

(Reporting by Sudip Kar-Gupta; Editing by Louise Ireland and David Holmes)