Wyndham to Buy Irving-based La Quinta's Management Business for $1.95 Billion

The Irving-based La Quinta hotel chain said Thursday its hotel management business is being bought by hotel giant Wyndham and that the hotels it owns will become a separate company. Wyndham Worldwide, which already operates mid-scale brands including Ramada and Baymont, will acquire La Quinta's hotel franchise and hotel management businesses for $1.95 billion in cash. The acquisition is expected to close in the second quarter of 2018 if approved by La Quinta shareholders.Most of La Quinta's hotels are owned by franchisees, rather than corporate, leading to what the company calls an "asset light" business model.Under the terms of the agreement, La Quinta shareholders will receive $8.40 per share in cash, (or about $1.0 billion total), and Wyndham Worldwide will repay about $715 million of La Quinta debt.Before the sale, La Quinta will spin off its owned real estate assets into a publicly-traded real estate investment trust called CorePoint Lodging. In 2016, the company owned 321 of its 888 locations, according to a company news release, which listed 2016 revenue as about $1 billion.The deal includes the set aside of a $240 million reserve for estimated taxes expected to be incurred due to the taxable spin-off.Wyndham's Hotel Group is the world's largest hotel business based on the number of properties. With the acquisition of La Quinta's nearly 900 managed and franchised hotels, Wyndham Hotel Group will span 21 brands and more than 9,000 hotels across more than 75 countries.The La Quinta Returns loyalty program, with its 13 million enrolled members, will be combined with the Wyndham Rewards program, with 53 million enrolled members."We are excited to announce the addition of the La Quinta franchise and management businesses to Wyndham Hotel Group's portfolio," Keith Cline, president and chief executive of La Quinta, said in a statement."We believe that, under the management of Wyndham's seasoned team of executives, the La Quinta portfolio will grow and thrive, yielding long-term benefits to the stakeholders of both companies."Cline will become president and chief executive of CorePoint Lodging after the spin-off.Company officials could not be reached for additional comment.Stephen P. Holmes, chairman and CEO of Wyndham Worldwide, said the transaction "builds on Wyndham Worldwide's proven track record of acquiring companies that are a strong strategic and cultural fit, add highly-regarded brands to our portfolio and offer clear opportunities to drive shareholder value through growth, shared best practices and sharp execution."Twitter: @krobijake   Continue reading...

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