Mexico City — US hotel chain Marriott International will acquire the five brands of Mexico’s City Express brand for $100 million, as part of a strategic plan aimed at expanding in Latin America.
The sale includes the City Express, City Express Plus, City Express Suites, City Express Junior and City Centro brands, as well as their web domains, intellectual property and the brand’s loyalty program, in addition to certain assets and liabilities related to them, City Express said in a statement.
Once the transaction is completed after receiving regulatory approval, the brands will come under the Marriott name.
The transaction, expected to close between late 2022 and mid-2023, will allow City Express to monetize an intangible asset, its brands, reduce its debt levels and improve its liquidity.
“The strengthening of our financial position will allow us to overcome the weight the stock currently carries from a potential dilution event and incorporate 676 new rooms in the coming months,” City Express CEO Luis Barrios said in the statement.
The news was described as positive by analysts at Actinver and Monex.
“Not only did the company manage to monetize the strong value of its brands (. . . ) but also net earnings of approximately $79 million will strengthen its capital structure,” Valentin Mendoza, an analyst at Actinver, wrote in a note.
City Express shares closed Wednesday up 26.6% on the Mexican Stock Exchange. Marriott International shares remained unchanged.
The transaction will allow Marriott International, which owns brands such as Aloft and Courtyard, to become the largest hospitality company in Latin America and the Caribbean, said Marriott International in another statement.
The purchase will increase Marriott International’s presence by 45%, registering 486 properties in 37 countries.
City Express, which is listed on the Mexican Stock Exchange, will become an approved operator, developer, project manager and construction supervisor in Latin America and the Caribbean for future properties bearing the City Express brand and other Marriott brands within the limited-service segment.
The Mexican company already has a presence in Costa Rica, Colombia and Chile.
Following the transaction, City Express’ corporate structure will remain unchanged, retaining operating contracts, development activities and hotel ownership.