Accor’s $1.2bn takeover of Mantra is set to create the biggest hotel group in Australia

Hotel giant Mantra Group Ltd has agreed to an AUD$1.18bn buyout bid from Accor SA, in a move which will unite Australia's two biggest hotel groups.

The bid comes at a time when tourism is rising sharply in Australia, thanks to a growing number of visitors from the Asia-Pacific.

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The deal will give the combined group about 50,000 rooms which translate to 11% of Australia’s hotel market, according to IBISWorld statistics.

Mantra’s management has agreed to Accor’s offer of AUD$3.96 per share, including a special dividend, which will give French-listed Accor greater exposure in Australia’s capital cities and regional areas.

Accor owns 4,200 hotels around the world, while Mantra runs 125 hotels in Australia, Hawaii and Indonesia.

Mantra Group’s brands include Mantra, Peppers and Breakfree, while Accor runs Novotel, IBIS and Mercure.

​Mantra chairman Peter Bush said the sale was an attractive deal for shareholders.

"The board believes that the offer price of $3.96 cash per share recognises the strategic value of our business and our success in becoming a leading accommodation provider," said Mr Bush.

"The offer represents compelling value and provides an attractive opportunity for shareholders to realise this value."

He said AccorHotels has a global capability and deep skills that will "benefit Mantra's customers and provide opportunities for our team members".

The pair will now seek to get clearance from the Foreign Investment Review Board and antitrust regulator the Australian Competition and Consumer Commission (ACCCC), said the company.

The competition regulators could potentially object to the combination of two such large groups.

If cleared, the deal would be the second-biggest in Australia’s hotel sector, and the largest buyout of an Australian entity by French interests, according to data from Thomson Reuters.

The number of visitors to Australia has risen 9% in the past financial year to hit a record 7.9 million. Spending by international visitors also reached a record of US$40.6bn.