Wyndham Worldwide Will buy La Quinta's Hotel Business

Wyndham Worldwide will buy 900 mid-scale, upper mid-scale and economy locations of La Quinta for $1.95 billion. U.S. hotel operator Wyndham Worldwide will have a total of 21 brands with the acquisition of La Quinta in the second quarter of 2018. With this news Wyndham hotel group which already has big names like Ramada, Days Inn and Super 8 budget lodgings saw a growth of 2.5 percent in share price.

According to Moodys, this deal will give "credit-positive" to Wyndham as revenue per available room (RevPAR) will improve which is a key industry metric. This is why analysts are saying it's a good deal for Wyndham's midscale and upper midscale hotels.

Wyndham will set aside a reserve of $240 million for estimated taxes as part of La Quinta's spin-off and will repay about $715 million of La Quinta debt net of cash. With a market capitalization of about $2.28 billion La Quinta shareholders will receive $8.40 per share in cash. Barclays is financial adviser for Wyndham, while J.P. Morgan is adviser La Quinta.