Wyndham Hotels & Resorts' board of directors has rejected Choice
Hotels International's revised proposal to acquire the hotel company,
calling Choice's latest offer a "step backwards" in negotiations.
Wyndham last month rejected Choice's
original cash-and-stock proposal of $90 per share,
roughly totaling $7.8 billion.
After a month of what Wyndham called
stalled conversations, Choice in a letter to Wyndham's board submitted
an "enhanced" offer. Choice didn't increase its per-share offer, which
Wyndham calculated at about $86 per share given Choice's lower stock
price.
Choice's offer includes $49.50 per share in cash and 0.324 shares of Choice stock.
In a letter responding to Choice, Wyndham said Choice's
latest letter was not advancing the conversation, but rather
"represents a step backwards despite being delivered nearly a full month
after you decided to unilaterally go public with your unsolicited
proposal."
Wyndham chairman Stephen Holmes said
in the letter: "Choice
continues to ignore our major concerns around value, consideration mix,
and asymmetrical risk to our shareholders given the uncertainty around
regulatory timeline and outcome."
While Choice's latest bid represents a lower
purchase point, the company did include a layer of protection for
Wyndham shareholders—which Wyndham has said is required—should federal regulators deny the deal or require concessions.
Choice
president and CEO Patrick Pacious in a letter sent to Wyndham on November 14
indicated Choice would include a $435 million termination fee and a
"ticking fee" of 0.5 per cent of the purchase per month in the case of
regulatory delays.
Additionally, "Choice agrees to take any actions
required by antitrust regulators to close so long as such actions would
not have a material adverse effect on the combined company," according
to Pacious.
This additional element, however, did not sway
Wyndham. Holmes called the termination fee "low" and indicated the
two-year period for Choice to obtain regulatory approvals "would both
create a prolonged period of limbo and expose Wyndham and its
shareholders to significant asymmetrical risk."