On Monday, Stifel analysts maintained their Hold rating on Hyatt Hotels Corporation (NYSE:H) with a price target of $157.50. The company, currently trading near its 52-week high of $168.20, has demonstrated strong financial performance with impressive gross profit margins of 69%. The firm's commentary followed Hyatt's announcement that it has agreed to acquire Playa Hotels & Resorts N.V. (NASDAQ:PLYA) for $13.50 per share, a 4.3% premium over PLYA's closing price on Friday. The transaction is valued at approximately $2.6 billion, which includes around $900 million of debt, minus cash, and is valued at 10.7 times the projected 2025 adjusted EBITDA before synergies.
Hyatt's acquisition of Playa Hotels & Resorts, in which it previously held a 9.4% stake, is expected to finalize later in the year. The deal was set in motion following an exclusivity agreement between the two companies that was established in late December. Stifel's analysis pointed out that the 2025 earnings projections for PLYA might be conservative, as they do not fully account for the expected earnings from the Zilara Cancún, which is currently undergoing significant renovations.
Hyatt's management has indicated that the acquisition of PLYA is a strategic move designed to secure long-term management contracts for high-quality resorts in key locations. This move is expected to bolster Hyatt's presence in strategically significant markets, offering long-term benefits from the management of these iconic resort properties. With a market capitalization of $15.8 billion and last twelve months EBITDA of $673 million, Hyatt demonstrates the financial strength to execute this strategic expansion.
In other recent news, Playa Hotels & Resorts is in the spotlight as Hyatt Hotels Corporation has announced its intent to acquire the company in an all-cash transaction valued at approximately $2.6 billion, or $13.50 per share. Truist Securities has maintained a Hold rating on Playa with a $13.00 price target, while Citi analysts have raised their price target for Playa to $13.00, keeping a neutral stance. Both Truist and Citi have expressed confidence in the likelihood of the transaction's successful closure.
Hyatt's strategy involves financing the acquisition with new debt and repaying over 80% of this debt with proceeds from asset sales. The acquisition is expected to be completed later in 2025, subject to approval by Playa shareholders, regulatory bodies, and other customary closing conditions.
Meanwhile, Hyatt has also entered into a strategic joint venture with Grupo Piñero to manage Bahia Principe Hotels & Resorts properties and own the brand. This partnership aims to expand Hyatt's all-inclusive offerings by including 22 resorts and approximately 12,000 rooms from the Bahia Principe brand into its Inclusive Collection.
Analyst firms Bernstein and Mizuho (NYSE:MFG) Securities have reiterated positive outlooks on Hyatt, with Bernstein maintaining an Outperform rating and a price target of $188.00, and Mizuho raising the price target to $207 from the previous $198, while sustaining an Outperform rating on the stock. Both firms have highlighted Hyatt's growth potential and strategic business advantages.
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