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Wyndham Worldwide Corporation will acquire La Quinta Holdings, Inc. in a $1.95 billion dollar cash deal announced Thursday morning. The acquisition is expected to close by the end of the second quarter of 2018, however, in the even that the deal falls through, La Quinta will pay Wyndham a termination fee of $37 million.
Wyndham spelled out the details of the agreement in a press release Thursday morning:
“Under the terms of the agreement, stockholders of La Quinta will receive $8.40 per share in cash (approximately $1.0 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 expected to be incurred in connection with the taxable spin-off of La Quinta’s owned real estate assets into CorePoint Lodging Inc.”
Once the acquisition is complete, Wyndham Worldwide Corporation will become the largest hotel group in the world, with over 9,000 properties under 21 brands. The current title holder is Marriott International after its 2016 acquisition of Starwood Hotels brought its total number of properties to more than 5,500 worldwide.
Wyndham has significantly expanded its holdings in the midscale hotel market in recent years. Wyndham just completed its acquisition of the AmericInn hotel brand in October 2017, and integrated 46 additional hotels across the US into the family toward the end of 2017.
Last August, the chain announced that it would spin off the Wyndham Hotel Group into a separate, publicly-traded company distinct from Wyndham Worldwide Corporation. The transition is also anticipated to occur sometime in the second quarter of 2018.
La Quinta will also undergo a spin-off before the acquisition is complete, converting its real estate assets into a publicly-traded real estate investment trust called CorePoint Lodging Inc. Wyndham plans to set aside a $240 million reserve to cover estimated taxes as part of this spin-off.
La Quinta Returns members will be able to take advantage of Wyndham’s significantly larger loyalty program, since Wyndham is worldwide while La Quinta properties are only located in the United States, Canada, Mexico and Honduras.
Feature photo courtesy of Shutterstock.com