Choice Hotels has escalated its pursuit of Wyndham Hotels & Resorts by initiating a hostile takeover offer. After repeated unsuccessful attempts to strike a deal through negotiations, Choice Hotels is now directly targeting Wyndham’s shareholders.
The offer maintains the same terms as the previous bid made to Wyndham’s management — $49.50 in cash and 0.324 shares of Choice common stock per Wyndham share, according to an announcement from Choice Hotels. This proposition allows Wyndham shareholders the flexibility to opt for cash, shares or a blend of both.
“While we would have preferred to come to a negotiated agreement, the Wyndham Board’s refusal to explore a transaction has left us with no choice but to take our proposal directly to Wyndham’s shareholders. Wyndham chose to publicly reject our last proposal without any engagement even after we addressed their concerns, including adding significant regulatory protections for their shareholders,” Patrick Pacious, President and Chief Executive Officer of Choice, said in a news release.
Choice Hotels plans to engage with Wyndham’s shareholders in the coming days and weeks while simultaneously initiating the regulatory approval process. The company’s persistence in pursuing Wyndham reflects its long-standing interest, with previous efforts dating back several months.
Wyndham’s rejection of the unsolicited $8 billion buyout offer in October, labeling it as “opportunistic” and undervaluing their growth potential, was followed by chairman Stephen Holmes highlighting significant risks associated with Choice’s proposal.
Despite multiple attempts to address Wyndham’s concerns, negotiations reached an impasse, leading Choice Hotels to make its bid public. Even after a private proposal in November — offering the same terms alongside board representation for Wyndham — Wyndham remained steadfast in rejecting the offer.
Choice Hotels is resolute in its pursuit, still extending the offer of board representation and a consistent termination fee. Meanwhile, Wyndham is deliberating over the offer, advising stockholders to withhold action until the board announces its recommendation.
The exchange offer is slated to expire on March 8, 2024, unless amended or withdrawn. Choice Hotels is committed to finalizing the transaction within a year and is planning director nominations for Wyndham’s 2024 annual shareholders meeting.
Wyndham’s financial performance last year exhibited a profit of $355 million with revenues totaling $1.5 billion. In contrast, Choice Hotels manages around 7,500 hotels across 46 countries and is pursuing the acquisition of Wyndham, which operates more than 9,000 hotels under various brands.
