Choice Hotels Not Taking No For An Answer In Bid To Acquire Wyndham
Choice Hotels International is firing back after Wyndham Hotels & Resorts' board of directors advised shareholders Monday to reject Choice’s latest move to acquire the company.
Wyndham’s recommendation to rebuff Choice’s newest offer shows how “divergent their board's interests are from their shareholders',” Choice said in a press release Wednesday.
Tensions are high between the two rival hotel companies, with Choice ratcheting up efforts to acquire Wyndham, culminating with an attempt at a hostile takeover that became public last week.
“Wyndham has sought to threaten shareholders' ability to realize value,” Choice said in the release. “Wyndham's comments call into question their ability to properly support franchisees while also generating shareholder value through M&A.”
Choice said it has engaged with dozens of Wyndham’s institutional shareholders representing over 40% of the company’s shares, adding that many have expressed support for the merits of a transaction as well as the desire for both parties to work together toward a quick resolution.
Choice’s most recent offer to shareholders is the same one it offered to Wyndham’s management in October: $49.50 in cash and 0.324 Choice shares for each Wyndham share, The Wall Street Journal reports. The deal is worth $7.8B, or $90 per share.
On Monday, Wyndham’s board of directors unanimously recommended shareholders turn down Choice’s “inadequate” offer.
“Choice has, once again, failed to address the major value gap and risks of their offer — which remains virtually unchanged from the terms outlined in their previous unsolicited proposal,” Stephen Holmes, chairman of Wyndham's board, said in a release.
The board’s core issues with the proposal include a likely regulatory review period of up to 24 months with an uncertain outcome, an inadequately valued offer and the lack of consideration for Wyndham’s growth prospects, Holmes said.
“Our Board has made itself consistently clear on these risks, but Choice continues to ignore what is in the best interests of Wyndham shareholders by repeatedly proposing illusory and unrealistic offers while making inconsistent and misleading public statements,” Holmes said.
Choice has pursued a purchase of Wyndham since at least May, originally offering $80 per share in cash and stock. If the companies merged, their combined brands would account for about 17% of all hotel rooms in the country, Choice CEO Patrick Pacious told the WSJ.
Choice owns 22 brands and brand extensions that operate about 7,500 properties, including Quality Inn, MainStay Suites, Comfort Inn, Econo Lodge and Clarion. Wyndham's 24 brands include Super 8, La Quinta, Ramada and Days Inn, operating across roughly 9,100 properties.
Choice’s offer to Wyndham shareholders is due to expire March 8, according to the WSJ.
