10:38 AM EST, 12/23/2024 (MT Newswires) -- Hyatt Hotels ( H ) is in exclusive negotiations to potentially acquire Playa Hotels & Resorts ( PLYA ) , among other options being considered for the operator of resorts in Mexico, Jamaica and the Dominican Republic, the companies separately announced on Monday.

Their exclusivity agreement expires at the end of Feb. 3, Playa said. Hospitality company Hyatt already owns a 9.99% stake in Playa.

"Our board and management team regularly review our structure, strategy and opportunities to enhance shareholder value, and we are pleased to enter into exclusive discussions with Hyatt regarding potential strategic options," Playa Chief Executive Bruce Wardinski said in a statement. "The Playa board and management team will remain open-minded and continue to act in the best interests of all Playa shareholders."

Both companies said there's no assurance that a deal will be struck. Shares of Hyatt declined 2.1% in Monday trading, while Playa's Nasdaq-listed stock jumped 29%.

"Strategic alternatives under consideration could have compelling strategic merit to add new incremental durable fee streams for Hyatt," Hyatt CEO Mark Hoplamazian said in a separate statement. "We remain steadfastly committed to our asset-light business model and if this process continues, we will continue to map out a clear path for an asset-light outcome for any strategic alternatives we undertake."

A transaction between the two is more likely than not, Truist Securities said in a client note. Playa has been signaling its interest in a potential sale "as they believe shares are undervalued on the public market," according to the brokerage.

Still, Hyatt's interest in Playa come as a surprise to Truist because of the company's past focus on selling hotels instead of buying them. Should Hyatt emerge as the buyer, it will likely convert the all-inclusive hotels it doesn't own to a Hyatt brand and divest the real estate, Truist said.

"We speculate the real estate could be sold-off over time or possibly via a pre-arranged sale concurrent with the possible acquisition of (Playa)," Truist said.

Last month, Playa reported break-even in third-quarter adjusted earnings per share versus a loss of $0.06 the year before, while total revenue declined to $183.5 million from $213.1 million. At the end of October, Hyatt reported adjusted EPS of $0.94 for the September quarter, up from $0.74 a year ago, while revenue ticked up to $1.63 billion from $1.62 billion.

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