Wyndham Hotels & Resorts has rejected a hostile acquisition offer from Rockville, Maryland-based Choice Hotels, hours after Choice made details of its offer public.
Choice went public with the $7.8 billion offer Tuesday after Wyndham executives and its board broke off protracted negotiations over a potential sale that began in April. Choice’s latest offer was worth $90 per share, a 30% premium over Wyndham’s closing share price on Oct. 16. The offer for Wyndham shareholders was 55% cash and 45% in Choice stock.
In rejecting the acquisition offer, Wyndham cited the likelihood of a protracted regulatory approval process with no certain outcome, potential franchisee churn and excessive leverage levels for a combined company.
“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 Holmes, chairman of the Wyndham board of directors.
In going public with its latest offer, Choice said it saw value in the transaction, despite Wyndham disengaging from talks.
“A few weeks ago, Choice and Wyndham were in a negotiable range on price and consideration, and both parties have a shared recognition of the value opportunity this potential transaction represents,” said Patrick Pacious, president and CEO of Choice Hotel. “We were therefore surprised and disappointed that Wyndham decided to disengage. While we would have preferred to continue discussions with Wyndham in private, following their unwillingness to proceed, we feel there is too much value for both companies’ franchisees, shareholders, associates, and guests to not continue pursuing this transaction.”
Choice also cited benefits to franchise operators it says the merger would bring, including lower costs and better guest experiences.
A merger would bring together some of the best-known hotel brands, many in the budget category. Wyndham has 21 franchise brands, including Super 8, Days Inn, Howard Johnson, Ramada and La Quinta. Choice has 22 brands, including Comfort, Quality Inn, Rodeway Inn and EconoLodge. It gained nine brands after closing on its $675 million acquisition of Radisson.
