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NASDAQ-listed Marriott International has agreed to pay about R2.02bn SA rand for Protea Hospitality Holdings’ three brands and its management company.
The companies said on Wednesday that they had signed definitive agreements for the deal, which was first announced in November 2013.
The purchase price represents about 10 times Protea’s expected pro forma 2014 calendar year earnings before interest, taxes, depreciation and amortisation (ebitda), excluding transaction costs.
South Africa-based Protea has a significant presence on the rest of the continent, and the deal will give Marriott’s African expansion plans a significant boost.
Africa is seen as the new frontier for hotel developments, and major international chains are increasingly turning their attention to the continent.
Protea has 116 hotels with 10,148 rooms in seven African countries including South Africa. Marriott has said that on completion of the deal, it would become the largest hotel company in the Middle East and Africa region — nearly doubling its distribution there to more than 23,000 rooms in the region.
The transaction is subject to various approvals, including from South Africa’s Reserve Bank and Competition Commission.
Marriott and Protea plan to close the transaction on April 1.
Analysts also expect the deal to shake up the three- and four-star hotel market in South Africa.
