What is the currency used for the base consideration in The Standardx's Bahia Principe Transaction?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
ahia Principe Transaction (see Note 4) for €419 million of base consideration, subject to customary adjustments related to working capital, cash, and indebtedness, and including €60 million of deferred consideration payable at future dates. We may pay additional variable contingent consideration through 2034 primarily related to the achievement of certain milestones for the development of additional hotels to be managed by the joint venture. The contingent consideration is payable at each hotel opening and is based on a multiple of stabilized base and incentive management fee revenues, and therefore, we are unable to reasonably estimate our maximum potential future consideration.
We closed on the transaction on December 27, 2024, paid cash of €359 million (approximately $374 million) and accounted for the transaction as a business combination as we are the primary beneficiary of the VIE (see Note 4). Upon acquisition, we recorded a $58 million deferred consideration liability at fair value, of which $20 million is recorded in accrued expenses and other current liabilities and $38 million is recorded in other long-term liabilities on our consolidated balance sheet. The fair value was estimated using a discounted future cash flow model and includes assumptions and judgments regarding the discount rate, which is primarily a Level Three assumption. We also recorded a $33 million contingent consideration liability at fair value in other long-term liabilities on our consolidated balance sheet. The fair value was estimated using a discounted future cash flow model and includes assumptions and judgments regarding the discount rate, estimated probability of achieving the hotel development milestones, and expected amount and timing of payments, which are primarily Level Three assumptions. Total purchase consideration was determined as follows:
| Management and hotel services agreement and franchise agreement intangib
Source: Item 23 — Receipts (FDD pages 85–132)
What This Means (2025 FDD)
According to The Standardx's 2025 Franchise Disclosure Document, the base consideration for the Bahia Principe Transaction is in Euros (€). The document states that the company completed the Bahia Principe Transaction for €419 million of base consideration, subject to customary adjustments. This included €60 million of deferred consideration payable at future dates.
The Standardx paid €359 million in cash for the transaction, which was approximately equivalent to $374 million at the time of the transaction's closing on December 27, 2024. The transaction was accounted for as a business combination, with The Standardx being the primary beneficiary of the VIE (Variable Interest Entity).
Additionally, The Standardx may pay additional variable contingent consideration through 2034, which is primarily related to achieving certain milestones for developing additional hotels to be managed by the joint venture. These payments are based on a multiple of stabilized base and incentive management fee revenues, making it difficult to estimate the maximum potential future consideration. This contingent consideration is payable at each hotel opening.