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Wyndham units will be aggressive in M&A post-spin, execs say

Wyndham Worldwide Corp.'s relative share price did not rise high enough over the last decade for the company to pursue major acquisitions, but its hotel and timeshare units could be more aggressive after their planned separation, Chairman and CEO Steve Holmes said.

The company is planning to spin its Wyndham Hotel Group into a pure-play hotel company and form a combined, independent timeshare company with its Wyndham Vacation Ownership and Wyndham Destination Network businesses.

On an earnings conference call, executives declined to provide details on the new companies' capital structure, but said more will be forthcoming in a filing before the end of 2017.

More broadly, Holmes said the new companies will benefit from being able to focus more narrowly on their core operations.

When Wyndham itself spun off from Cendant Corp. in 2006, "I had high hopes and aspirations for doing a lot of M&A, because I've done that my entire career, and I thought this would be a great vehicle," he added. "Unfortunately, the market did not provide us that opportunity with the multiple we were trading at, so it limited us in our ability to do transactions."

In contrast, the new companies should have "significant" free cash flow and trade at higher multiples, enabling them to be more active and aggressive in pursuing deals, Holmes said.

Moreover, Wyndham Vacation Ownership, as the largest publicly traded timeshare business in the world, will have the scale to be "a very prominent participant" in timeshare acquisitions after the separation, CFO Tom Conforti said.