Starwood Buys Stakes
In Two French Firms

Starwood Capital Group LLC, a U.S. private investment firm, agreed to buy majority stakes in French companies Groupe Taittinger SA and Société du Louvre for $1.46 billion in cash, giving it control of two of Paris's most historic luxury hotels, a 271-year-old Champagne producer and crystal maker Baccarat.

Starwood Capital, run by hotel executive Barry S. Sternlicht, agreed to buy the controlling stake in Champagne maker Taittinger, based in Reims, France, from the Taittinger family and Belgian financier Albert Frère. Taittinger and Mr. Frère control Société du Louvre.

Besides Baccarat, Société du Louvre owns the Concorde Group, among whose assets are 14 luxury hotels, including the Hotel Lutetia and the Hotel de Crillon in Paris. It also owns the 805-hotel Envergure Group, Europe's second-largest budget chain.

"They have some of the finest assets owned by any company in the lodging space," said Mr. Sternlicht, chairman and chief executive of Starwood Capital, a closely held real-estate investment-management firm in Greenwich, Conn. "It's a company I've admired for a very long time."

Starwood plans to sell the Champagne business, consulting with the family and keeping it in French hands. "It's very important -- not only the family name on the business -- but it's also a national treasure and we will fully respect that," Mr. Sternlicht said.

He wouldn't say whether he would sell the non-Champagne luxury-goods businesses Taittinger owns, but he did say most of the company's value was in its real estate. "Even the Champagne business owns tremendous acreage in Champagne and in Napa Valley," he said.

Starwood will attempt to purchase the remainder of the company after the sale is cleared by the European Union, Mr. Sternlicht said. The entire company would be valued at $2.54 billion plus about $605 million in debt.

The sale was spurred by the impending breakup of a shareholder pact between the Taittinger family, which owns 35% of Taittinger, and Mr. Frère, who owns 25%. Starwood is buying both stakes. Separately, the Peugeot family agreed to sell its stake in Taittinger, bringing Starwood Capital's ownership to more than 65%.

The Taittinger company controls 44% of Louvre; Starwood also is buying Mr. Frère's 15% stake and the Peugeots' 6%, to give it control.

Taittinger, founded in 1734, has been controlled by the Taittinger family since 1931. "We feel that after more than 60 years of work and building this unique group, this group deserves to see its future secured," said Anne-Claire Taittinger, chairwoman of the company.

Mr. Sternlicht founded Starwood Capital in 1991. It has bought more than $9 billion of real estate and invests in all types of commercial real estate.

But he made his name in the hotel business, founding Starwood Hotels & Resorts Worldwide Inc. in 1995. Mr. Sternlicht built Starwood Hotels into one of the biggest hotel companies in the world in the span of three years by acquiring Westin and, in a blockbuster deal, ITT Corp., which owned the Sheraton and St. Regis brands.