Choice Hotels International has signed an agreement to acquire Radisson Hotel Group Americas. The deal is valued at $675 million and was announced by Choice Hotels. The agreement includes the franchise business, hotels, intellectual property rights, and operations of the Radisson Hotel Group.
The acquisition deal covers the purchase of 10 Radisson Blu hotels, 9 Radisson Individuals, 130 Radisson hotels, 4 Radisson RED Hotels, 1 Park Plaza, and 17 Park Inn and 453 Country Inn & Suites owned by the Radisson Group in Canada, Latin America and the Caribbean, and the United States.
While announcing the deal, Choice Hotels stated that adding these 624 hotels and more than 68,000 rooms from Radisson’s nine brands would expand its presence in core upper-midscale and upscale hospitality segments, especially in the regions of the West Coast and Midwest of the US.
The agreement has secured unanimous approval from the Board of Directors of Choice Hotels. It is supposed to complete all the regulatory and customary requirements and to get closed in the second half of this year. The deal is inclusive of the real estate value of three owned assets. It is expected to be funded with revolver borrowings and cash on hand.
After closing the deal, Choice Hotels will control and operate the brands and work in tandem with the Radisson Group for the success and growth of the brands. The financial advisor to Choice Hotels in this deal is Credit Suisse Securities.
However, Choice Hotels has clarified that the acquisition deal will not bring any changes to the company’s capital allocation strategy, which is related to planned share repurchases and dividend payment policy.
Although Choice Hotels stocks are yet to get active premarket after the deal’s announcement, they have nosedived by 23% in the year to date, and the S&P 500 SPX has plunged by 18%.