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PARIS, April 23 (Reuters) - French hotels and service vouchers group Accor (ACCP.PA) said it would sell its Red Roof Inn motel chain for nearly 1 billion euros, leaving it focused in the United States on developing its Motel 6 brand.
Accor said it would sell Red Roof for $1.32 billion to a consortium comprising Citigroup’s (C.N) Global Special Situations Group and Westbridge Hospitality Fund LP. Westbridge is a partnership between privately held hotel operator Westmont and a number of Canadian pension funds.
Accor said the deal would cut its adjusted net debt by 830 million euros, of which 470 million euros will be added to its cash reserves.
It said that the sale comprised 326 motels with 35,238 rooms.
The selling price represented around 11.2 times Red Roof Inn’s earnings before interest tax, depreciation and rent of $118 million, excluding nine Red Roof Inn properties that will be transferred to the Motel 6 brand, it added.
Red Roof operates in 42 states but is mainly focused on the East coast and Midwest regions. Accor put the unit up for strategic review last year after deciding it had little chance to develop the brand further and to take advantage of buoyant financial interest in hotel properties.
Accor said it was advised on the sale by Bank of America.
In a statement, Accor said the deal would let it focus on developing Motel 6.
“With the ambition of being the world leader in economy and budget hotels, Accor plans to step up development of Motel 6 by opening more than 200 units in the United States and Canada by 2010,” Chief Executive Gilles Pelisson said in a statement.
Accor also operates around 10 upmarket Sofitel hotels in the U.S.