Wyndham Worldwide announces agreement to sell its European vacation rental business to Platinum Equity
Wyndham Worldwide Corporation has announced that it has entered into a definitive agreement for the sale of its European vacation rental business to Platinum Equity for approximately $1.3 billion.
In conjunction with the sale, the European vacation rental business has entered into a 20-year agreement under which it will pay a royalty fee of 1% of net revenue to Wyndham’s hotel business for the right to use the by Wyndham Vacation Rentals® endorser brand. The European vacation rentals operations will also participate as a redemption partner in the award-winning Wyndham Rewards® loyalty programme.
Wyndham’s industry-leading European vacation rental business is the largest manager of holiday rentals in Europe, with more than 110,000 units in over 600 destinations in more than 25 countries. The business operates more than two dozen local brands, including cottages.com, James Villa Holidays, Landal GreenParks, Novasol and Hoseasons. It generates approximately $750 million in annual revenue and approximately $130 million of EBITDA (earnings before interest, taxes, depreciation and amortization), including allocated costs.
Wyndham Worldwide originally announced its intent to explore strategic alternatives for its European rental brands in August 2017, in conjunction with the Company’s announcement of the planned separation of its hotel business from its vacation ownership and timeshare exchange businesses. The transaction is expected to close in the second quarter of 2018, subject to customary closing conditions including works council consultation.
Platinum Equity has been very active in the European M&A market and the firm’s current portfolio companies employ more than 16,000 people in the region. The proposed acquisition of Wyndham’s European vacation rental business represents Platinum Equity’s second European investment since the fourth quarter 2017 when the firm acquired Pattonair.
Wyndham Worldwide estimates that the tax obligations associated with the sale of the European Rental brands will be less than 15% of the proceeds. The Company expects to use the net proceeds from the sale for general corporate purposes, which may include debt repayment and/or funding of its recently announced acquisition of La Quinta Holdings’ hotel franchising and management businesses. Wyndham Worldwide’s planned spin-off of Wyndham Hotel Group remains on track for an expected distribution in the second quarter of 2018.
Deutsche Bank and Goldman Sachs are serving as financial advisors, and Kirkland & Ellis International LLP and Dechert LLP are serving as legal advisors to Wyndham Worldwide. Financing for the acquisition will be led by Bank of America Merrill Lynch. Latham & Watkins is acting as legal counsel to Platinum Equity.