After announcing plans a year ago to divide its hotel organisation into different companies, Blackstone-controlled La Quinta Holdings Inc. (NYSE: LQ)reached an offer this week to offer its hotel franchise and management organisations to Wyndham Worldwide Corp. (NYSE: WYN) for $ 1.95 billion.
As part of the arrangement, instantly prior to the sale La Quinta will spin off its owned real estate assets into a publicly-traded REIT to be called CorePoint Accommodations. The company’s owned and franchised portfolio currently consists of more than 880 hotel homes with about 87,500 rooms in 48 U.S. states, Canada, Mexico and Honduras.
Wyndham hopes the addition of La Quinta will expand its reach further into the fast-growing upper-midscale hotel section.
Wyndham’s Hotel Group is among the world’s largest and most varied hotel business based on variety of residential or commercial properties. With the acquisition of La Quinta’s asset-light, fee-for-service business consisting of almost 900 managed and franchised hotels, Wyndham Hotel Group will span 21 brand names and over 9,000 hotels across more than 75 nations.
“La Quinta will instantly turn into one of our flagship brands,” said Geoff Ballotti, president and CEO of Wyndham Hotel Group. “It is an exceptionally strong brand name that is led by service-minded associates who provide some of the greatest customer engagement levels in our market.”
Keith Cline, president and CEO of La Quinta, will serve in the same role at CorePoint Lodging.
“As we prepared for, the separation of our businesses is enabling greater strategic clarity and enabling our business to benefit from development chances that naturally circulation from each service model,” Cline stated. “The midscale and upper midscale sections are among the largest in the accommodations industry in regards to number of homes and designers – not unexpected provided the cash-on-cash returns. As a pure-play accommodations realty business with a portfolio focused in these highly preferable segments, there is a considerable chance to drive worth for CorePoint.”
Barclays is functioning as exclusive financial consultant and Kirkland & & Ellis LLP is functioning as legal consultant to Wyndham Worldwide. Barclays and Deutsche Bank are supplying dedicated financing to Wyndham Worldwide in connection with the transaction.
J.P. Morgan is acting as unique financial consultant and Simpson Thacher & & Bartlett LLP is functioning as legal consultant to La Quinta. J.P. Morgan is offering committed financing to CorePoint Lodging in connection with the deal.