From The Financial Times
Wednesday, April 24, 2013 – DENIS HENNEQUIN, THE chairman and chief executive of Accor was ousted from Europe’s largest hotels group by rooms late on Tuesday, a move that is likely to throw a fresh spotlight on the role of its activist minority shareholders.
Hennequin had led Accor for two years, taking the combined role after the sudden departure of Gilles Pélisson, who quit in January 2011 citing “strategic differences” with the board.
The board held an emergency meeting on Tuesday afternoon, after which the company issued a statement saying the group needed to “accelerate the implementation of [its] strategy.”
“The board took note of Denis Hennequin’s reservations and unanimously voted to terminate his mandate with immediate effect,” it said last night.
However the board endorsed Mr. Hennequin’s strategy, saying the “strategy adopted is the right one and that it will remain unchanged.”
But it made clear that the results of the strategy were not coming through fast enough.
Mr. Hennequin’s departure makes him the third chief executive to have had an unscheduled exit since Colony Capital, the US private equity group, took a stake in the company eight years ago.
Mr. Hennequin, a former chairman and chief executive of McDonald’s Europe, had been pursuing an “asset-light” strategy of reducing capital-consuming owned properties in favor of franchises and management contracts.
He was believed to have come under pressure to split its property holdings from its hotel management and brands arm to boost the value of the business in the face of underperforming shares. Last year Mr. Hennequin said publicly: “The separation would be counterproductive. The two activities enrich one another.”
In February he launched a three-year strategic plan to lessen dependence on Europe, by raising operating profits from emerging markets from 23 per cent to 50 per cent. The plan would result in “a clear improvement in the group’s economic performance by the end of 2016,” he said at the time.
Mr. Hennequin will be replaced temporarily by his deputy Yann Caillière until a permanent replacement is found.
Philippe Citerne, Accor’s vice-chairman, was appointed non-executive chairman while Sébastien Bazin, head of Colony Capital in Europe was made vice-chairman. Although transitional, Mr. Bazin’s appointment is likely to provoke controversy given the criticisms about the power of the minority shareholders at the company.
Accor shares fell 2.1 per cent to €25.41 in Paris. They have lost almost two-thirds of their value from their 2007 peak and are down 10 per cent in the past month.
Within six months of Colony’s original €1bn investment in 2005, Jean-Marc Espalioux quit suddenly as chief executive to be replaced by Mr. Pélisson.
In 2008, Colony was joined by French private equity investor Eurazeo in partnership as large shareholders in the hotels group.
Mr. Pélisson, nephew of the group’s co-founder, demerged Accor’s vouchers and services business – renamed Edenred – in 2010, a move for which Colony and Eurazeo had pressed, only seven months before his departure was announced.
The two private equity groups own 21 per cent of Accor’s shares and 40 per cent of its board seats. They have been accused of wielding disproportionate power in relation to their shareholding.
In 2009, six directors resigned, citing governance problems at Accor. They said in a statement at the time: “The investors who carry a determining influence on the [company’s future] have built their position on elevated debt levels that could lead them to favour a strategy or decisions that diverge from [other shareholders’] interests.”
Accor has been exposed to the economic downturn in Europe, which accounts for 70 per cent of its sales. The Paris-based group, whose brands include Sofitel and Ibis, the budget chain, reported a net loss of €599m last year against a €27m profit in 2011, mainly because of a €679m loss on the sale of Motel 6, its US chain.
Colony and Eurazeo declined to comment.