Choice Hotels International Inc. (NYSE: CHH) has put forth an offer to acquire all the outstanding shares of Wyndham Hotels & Resorts Inc. (NYSE: WH) at a price of $90.00 per share, payable in a mix of cash and stock and totaling $7.8 billion. However, Wyndham rejected the offer.
In a press statement, Choice said it engaged in talks with Wyndham for nearly six months before Wyndham withdrew from discussion. Choice President and CEO Patrick Pacious unveiled the offer by claiming, “We have long respected Wyndham’s business and are confident that this combination would significantly accelerate both Choice’s and Wyndham’s long-term organic growth strategy for the benefit of all stakeholders. For franchisees, the transaction would bring Choice’s proven franchisee success system to a broader set of owners, enabling them to benefit from Choice’s world-class reservation platform and proprietary technology to drive cost savings and greater investment returns. Additionally, the value-driven leisure and business traveler would benefit from the combined company’s rewards program, which would be on par with the top two global hotel rewards programs, enabling them to receive greater value and access to a broader selection of options across stay occasions and price points.”
However, Wyndham’s board of directors unanimously rejected the offer, citing “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 board also decried the offer as “opportunistic and undervalues Wyndham’s future growth potential.”
“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,” said Stephen P. Holmes, chairman of the Wyndham board of directors. “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.”
Photo: Ramada by Wyndham Jianyang, courtesy Wyndham Hotels