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Accor CEO expected to be replaced by duo: source

Denis Hennequin, Chairman and Chief Executive Officer of Accor, poses after an interview with Reuters in Paris March 27, 2013. REUTERS/Mal L
Denis Hennequin, Chairman and Chief Executive Officer of Accor, poses after an interview with Reuters in Paris March 27, 2013. REUTERS/Mal L

By Cyril Altmeyer and Noëlle Mennella

PARIS (Reuters) - Accor Chairman and Chief Executive Denis Hennequin, beset by skepticism over his ability to turn around Europe's largest hotels group, has decided to resign and is likely to be replaced by a duo, a source close to the board said.

The French company is expected to name board member Sebastien Bazin, the head of Colony Europe, as chairman and Accor's Chief Operating Officer Yann Caillere as chief executive, the source said on Tuesday.

"Hennequin has decided to throw in the towel," the source told Reuters.

Les Echos newspaper said on its website that Philippe Citerne, the Accord vice-chairman, was also a strong candidate to become chairman.

Sources close to the group had told Reuters earlier in the day that Hennequin's fate would be decided at a board meeting in the afternoon.

Accor confirmed that it was holding a board meeting on Tuesday but declined to elaborate, though shareholders are losing patience with the weak performance of Accor shares, down close to 5 percent so far this year.

"Mr Hennequin does not have the stature to lead a company which needs a real boss," a source close to the company told Reuters. "A majority of board members are on that wavelength within the board, and it's not just the funds."

Accor's top two shareholders, private equity firm Eurazeo and U.S. investor Colony Capital, which own a combined 21.4 percent of the capital and command four board seats, want the chain to accelerate the sale of hotels it owns in favor of management contracts or franchises.

Hennequin has also resisted pressure to split its property holdings from its hotels business.

Eurazeo and Colony both declined to comment.

ACTIVIST SHAREHOLDERS

Hennequin's exit, if confirmed, is likely to draw attention again to the role played by these activist shareholders.

Hennequin, the former CEO of McDonald's Europe who took the top job at Accor after his predecessor was ousted in 2010 over "strategic differences" with the board, is blamed for taking too long to overhaul the company, sources said.

If he leaves, Hennequin will be the third CEO at Accor whose departure has been accelerated by the Eurazeo-Colony alliance, analysts and industry observers said.

"You have markets that are not favorable and very demanding key shareholders who do not leave much time (to the CEO), and a boss who surrounds himself with yes-men and is not too present on the ground," a second source with good knowledge of the company told Reuters.

Accor's market capitalization of 5.9 billion euros ($7.7 billion) is little more than that of its former subsidiary Edenred . The meal vouchers company is valued at 5.6 billion euros.

Europe's largest hotel chain said in February that it planned to cut costs, expand in emerging markets and accelerate its move towards franchising or managing hotels for others in an attempt to boost profit margins.

The world's fourth-largest hotelier, which makes more than 70 percent of sales in Europe and is more exposed to the ailing region than rivals InterContinental , Marriott and Starwood , has unveiled a plan to boost its operating margin to more than 15 percent by 2016 from 9.3 percent in 2012.

"That Denis Hennequin engaged Accor in a four-year transformation plan may appear as not matching the urgency of the situation with a very tense economic climate in Europe," CM-CIC analyst Annick Thevenon said in a note.

(= 0.7674 euros)

(Reporting by Christian Plumb, Alexandre Boksenbaum-Granier and Dominique Vidalon; Editing by David Cowell and David Goodman)

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