Choice Hotels International, Inc. (NYSE: CHH) has signed an agreement to acquire Radisson Hotel Group Americas for around $675 million.
As per the terms of the agreement, Choice Hotels will acquire the intellectual property, operations and franchise business of Radisson Hotels in the U.S., Latin America, Canada and the Caribbean region.
The deal includes 17 Park Inn by Radisson hotels, 453 Country Inn & Suites by Radisson, four Radisson RED hotels, one Park Plaza hotel, nine Radisson Individuals, 130 Radisson hotels, and 10 Radisson Blu hotels as well as the Radisson Collection and Radisson Inn & Suites brands.
The President and CEO of Choice Hotels, Patrick Pacious, said, “This transaction brings together two highly complementary businesses, enhancing our guest offerings in the core upper-midscale hospitality segments, while extending our reach into the upper-upscale and upscale full-service segments and in higher revenue geographic markets.”
About Choice Hotels
Operating as a hotel franchisor, Maryland-based Choice Hotels has nearly 7,000 hotels with around 600,000 rooms in 35 countries and territories. It offers lodging options to hotels in the economy, extended-stay, midscale and upscale segments.
Wall Street’s Take
Following the announcement, Robert W. Baird analyst Michael Bellisario maintained a Hold rating on the stock and reduced the price target to $133 from $138 (10.7% upside potential).
The analyst said, “The acquisition will broaden the company’s portfolio and add higher chain scale brands.”
Overall, the stock has a Hold consensus rating based on one Buy, four Holds and two Sells. CHH’s average price target of $136.29 implies 13.4% upside potential from current levels. Shares have lost 21.8% year-to-date.
Conclusion
This acquisition will add 624 hotels to Choice Hotels’ portfolio, thereby expanding its presence in the upper-midscale and upscale hospitality segments in the West Coast and Midwestern U.S.
Surprisingly, CHH stock did not show any movement after the announcement of the deal, which is expected to help the company offer enhanced services to its guests.
