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Wyndham is buying La Quinta for $1.95 billion in cash

01/19/2018| 2:32:33 PM| 中文

This certainly won’t be the first or last acquisition we can expect to see in the hospitality industry.

Wyndham Worldwide, whose businesses include hotels, vacation rentals, and time shares, has announced it plans to buy La Quinta Holdings for $1.95 billion in cash in a deal expected to close by the second quarter. With the addition of La Quinta to theWyndham Hotel Group, the company will soon have 21 brands and more than 9,000 hotels in 75 countries.

La Quinta, which turns 50 this year, has more than 890 properties with approximately 87,500 rooms located in 48 states in the U.S. and in Canada, as well as in Mexico, Honduras, and Colombia spread out over three brands: La Quinta Inn & Suites, La Quinta Inn, and LQ Hotel. Wyndham Hotel Group’s brands include Days Inn, Super 8, Travelodge, and Wyndham Garden, among others.

The deal is expected to close in the second quarter, and would not impact the already planned spinoffs announced by both companies. Contingent upon the sale of La Quinta’s management and franchise business to Wyndham, the company would spin off its real estate business, CorePoint Lodging, which current La Quinta Holdings CEO Keith Cline would lead as its own separate public company.

Under the terms of the agreement, stockholders of La Quinta will receive $8.40 per share in cash, which comes out to approximately $1 billion in aggregate, and Wyndham Worldwide will repay approximately $715 million of La Quinta debt net of cash and set aside a reserve of $240 million for estimated taxes. The taxes are expected to be incurred in connection with the taxable spin-off of La Quinta’s owned real estate assets into CorePoint Lodging Inc.

Wyndham Hotel Group, as the company demonstrated last year with its $170 million acquisition of AmericInn, is eager to grow its midscale business, and La Quinta has been open to buyers for some time and to pursue the kind of scale that’s needed to power the growth of its brand.

Interestingly, both companies announced spin-off plans in the last year. La Quinta was the first, announcing in January 2017 that it intended to split itself into two companies: a franchise/management business and a real estate investment trust, CorePoint Lodging. And simultaneously while pursuing the spinoff, the company also said it was open to buyers as well.

The value of a deal like this for La Quinta’s shareholders, Cline said, was ideal. And the fact that La Quinta is such a mature and established brand in the midscale space is what drew so many companies’ interest in pursuing it. With La Quinta added to its portfolio, Wyndham is strategically growing its dominance in one of the most sought- after sectors in the hospitality industry.

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TAGS: Wyndham | La Quinta | acquisition | midscale hotel
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