Wyndham Hotels & Resorts has rejected a bid by Choice Hotels International to acquire all outstanding shares of Wyndham.
On Tuesday (17 October) Choice Hotels International launched a $7.8 billion deal to buy US rival Wyndham Hotels & Resorts.
As reported yesterday, the total value of the full deal would be around $9.8 billion including Wyndham’s debt, with investors being offered $90 per share in cash and Choice stock.
Choice said it had made its offer public following Wyndham's decision to "disengage from further discussions with Choice, following nearly six months of dialogue".
Choice also said it sent an initial letter proposing to acquire Wyndham in April 2023. The original deal was set at $80 per share, comprising of 40 per cent cash and 60 per cent in Choice shares. Wyndham rejected that proposal and refused to engage in further discussions, according to Choice.
However, Wyndham refutes this and in a statement today Stephen Holmes, chairman of the Wyndham Board of Directors said: “We have engaged with Choice and its advisors on multiple occasions to explore these risks. However, it became clear the proposed transaction likely would take more than a year to even determine if, and on what terms, it could clear antitrust review, and Choice was unable to address these long-term risks to Wyndham's business and shareholders.
“We are disappointed that Choice's description of our engagement disingenuously suggests that we were in alignment on core terms and omits to describe the true reasons we have consistently questioned the merits of this combination – Choice's inability and unwillingness to address our significant concerns about regulatory and execution risk and our deep concerns about the value of their stock."
Wyndham says its Board of Directors together with its financial and legal advisors, closely reviewed Choice's latest proposal and determined that it is not in the best interest of shareholders to accept the proposal.
According to Wyndham the proposal was rejected because of the following concerns:
- the proposed transaction involves significant business and execution risks, including an extended regulatory timeline and uncertainty of outcome, potential franchisee churn, and excessive leverage levels at the pro forma combined company;
- the consideration mix includes a significant component of Choice stock, which the Board believes is fully valued relative to Choice's growth prospects, especially when compared to Wyndham;
- the offer is opportunistic and undervalues Wyndham's future growth potential.
Stephen Holmes, chairman of the Wyndham Board of Directors added: "Choice's offer is underwhelming, highly conditional, and subject to significant business, regulatory and execution risk. Choice has been unwilling or unable to address our concerns.”
The statement from Wyndham added: “Choice's offer is an opportunistic attempt to take advantage of point-in-time stock price fluctuations coinciding with a time period where the exchange ratio is favourable to Choice.
“Choice's offer is insufficient relative to Wyndham's recent trading levels, significant growth momentum and premiums paid in precedent change of control transactions. Wyndham's Board believes Wyndham can deliver long-term shareholder value in excess of Choice's offer by continuing to execute on its business plan.”
BTN Europe contacted Choice Hotels International but it said at this time it had no further comment.
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