La Quinta stockholders will receive $8.40 per share in cash, approximately $1 billion total, and Parsippany-based Wyndham will pay off about $715 million in La Quinta debt, as well as setting aside $240 million for taxes related to another part of the transaction, according to a news release.
“This 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,” Stephen P. Holmes, chairman and CEO of Wyndham Worldwide, said in a prepared statement.
The deal will give Wyndham nearly 900 managed and franchised La Quinta hotels, bringing its holdings to 21 brands and more than 9,000 hotels in more than 75 countries. Texas-based La Quinta is one of the largest midscale brands in the industry, bolstering Wyndham’s position in the market.
“La Quinta will immediately become one of our flagship brands,” Geoff Ballotti, CEO and president of Wyndham Hotel Group, said in a statement. “It is an exceptionally strong brand that is led by service-minded associates who deliver some of the highest customer engagement levels in our industry. We expect that La Quinta guests and franchisees will benefit from our intense focus on product quality and our best-in-class technology, digital, loyalty and distribution platforms. The acquisition also significantly expands our hotel management business and provides us with substantial new opportunities to drive increased growth in our business.”
In a related portion of the transaction, La Quinta will spin off its real estate assets into a company called CorePoint Lodging Inc., a publicly traded real estate investment trust.
“We are excited to announce the addition of the La Quinta franchise and management businesses to Wyndham Hotel Group’s portfolio,” La Quinta CEO and President Keith Cline 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 CEO and president of CorePoint Lodging, effective upon the spinoff.
The acquisition is expected to close in the second quarter, pending customary approvals and conditions. It is also dependent upon the timing of the spinoff. Both boards of directors have signed off on the deal.
Barclays is exclusive financial adviser and Kirkland & Ellis LLP is legal adviser for Wyndham. Barclays and Deutsche Bank are providing committed financing to the company. J.P. Morgan is exclusive financial adviser and Simpson Thacher & Bartlett LLP is legal adviser for La Quinta. J.P. Morgan is providing committed financing to CorePoint Lodging.
Wyndham said its planned spinoff of the Wyndham Hotel Group remains on track for the second quarter, as well.