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Hyatt to buy Apple Leisure Group from KKR, KSL Capital in $2.7 billion cash deal

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U.S. hotel operator Hyatt Hotels said on Sunday that it has struck a deal to buy resort company Apple Leisure Group (ALG) from its private-equity owner KKR & Co and travel-and-leisure specialist KSL Capital Partners for $2.7 billion in cash.

ALG’s hotel portfolio consists of over 33,000 rooms operating in 10 countries. The portfolio has grown from nine resorts in 2007 to approximately 100 properties by the end of 2021 and has a pipeline of 24 executed deals with a large number of additional hotels in the development process

The acquisition will extend Hyatt’s footprint into 11 new European markets, enhancing its growth potential in a critical region for leisure travel. The transaction would also accelerate Hyatt’s asset-light transformation, which the company said includes a commitment to sell an additional $2 billion of hotel assets by the end of 2024.

The transaction has triggered fresh optimism about a return to vacation travel even as the U.S. economy continues to grapple with the new and more potent Delta virus threat. Like many travel-related companies, Apple Leisure’s business got clobbered by virus-related lockdowns and travel bans last year, but it has rebounded as restrictions have eased and people are returning to pleasure travel with a vengeance.

For Chicago-based Hyatt, one of the world’s biggest hospitality companies, the deal would bolster its already considerable resort-management portfolio and give it one of the biggest U.S. providers of charter flights and vacation packages for the global traveler.

Commenting on the deal, Alejandro Reynal, chief executive officer, ALG said, “Combining Hyatt’s deep expertise and global brand footprint with ALG’s strong resort brands, operating capabilities, and robust development plans will elevate our differentiated position and create a leader in luxury leisure travel.”

“With the asset-light acquisition of Apple Leisure Group, we are thrilled to bring a highly desirable independent resort management platform into the Hyatt family,” said Mark Hoplamazian, president and chief executive officer, Hyatt.

The acquisition will meaningfully increase the percentage of revenues and earnings Hyatt will generate from fees. Additionally, Hyatt anticipates fulfilling its current commitment to sell $1.5 billion of hotel real estate in 2021.

Hyatt expects to fund the purchase with a combination of $1 billion of cash on hand and new debt financings, and the remainder with about $500 million from equity financing. As per reliable reports, Hyatt is committed to maintaining an investment-grade profile and to continue managing the balance sheet prudently after the transaction.

The deal is expected to be announced on Monday, the report said, citing people familiar with the matter.

In 2017, KKR and KSL bought the Pennsylvania-based resort operator from Bain Capital for an undisclosed price.

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