Friendly bullies

5 May 2008 By Pierre Briancon

A US fund and a French investment company want to almost double their stake in the French hotel group to 30%. They say it s all friendly. Accor wants some clearer proof of friendship before accommodating the investors demand for more board seats. It s a reasonable precaution.

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The board of Accor, the French hotel group, on May 5 cautiously greeted the news that Colony Capital, the US realestate fund, and investment company Eurazeo jointly planned to take their stake in the company from the current 17% to 30%.

The two funds, which are bound by a shareholders pact, said they would ask their board representation to double from two to four directors.

The Accor board wants the funds, who say their investment is "friendly", to explicitly confirm their support for the company's strategy, and committ to a "longterm stability pact" so that their increased stake would not lead to "a de facto takeover either active or passive of the company".

Accor shares rose 1% on the news Monday, giving the company a E12.5bn market capitalisation. Shares of Eurazeo rose 3%.

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