Choice Hotels International Inc. is launching a hostile bid to acquire Wyndham Hotels & Resorts Inc., sending Wyndham’s stock rising 7.2% Tuesday and lowering Choice shares by 5.3%.
Choice
CHH,
is offering to purchase Wyndham
WH,
at a price of $90 per share, payable in a mix of cash and stock. The deal is valued at approximately $7.8 billion on a fully diluted basis and approximately $9.8 billion, with the assumption of Wyndham’s net debt.
In a statement Choice said it is making its latest proposal public following Wyndham’s decision to disengage from further discussions with Choice, adding that this follows nearly six months of 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 CEO Patrick Pacious said in the statement. “We were therefore surprised and disappointed that Wyndham decided to disengage.”
Related: Choice Hotels affirms full-year profit outlook, as first-half hotel opening rose 39%
“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,” he added. “Importantly, we remain convinced of both the many benefits of the combination and our ability to complete it.”
Wyndham released a statement Tuesday saying that its board of directors has unanimously rejected Choice’s proposal. “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, in the statement. “While our Board would support a value-maximizing transaction, given the substantial, unmitigated embedded risks and value destruction potential presented by the proposed transaction, our Board determined it is not in the best interests of Wyndham shareholders.”
In April 2023, Choice sent its initial letter to Wyndham regarding a potential transaction, proposing to acquire Wyndham for $80 per share. That offer comprised 40% cash and 60% Choice stock. Wyndham rejected the proposal and refused to engage in further discussions, according to Choice, which subsequently increased its proposal to $85 per share, comprising 55% cash and 45% Choice stock.
Related: Choice Hotels to acquire Radisson Hotel Group Americas in deal valued at about $675 million
“The companies’ respective Board Chairs and CEOs then met in person, and following that meeting, Choice improved its proposal yet again,” Choice said in its statement, noting that the $90 per share bid, which comprises 55% cash and 45% Choice stock, is the company’s “best and final offer.”
Last year Choice acquired Radisson Hotel Group Americas in a deal valued at about $675 million.
Choice shares have risen 5.2% in 2023, while Wyndham shares have gained 3.9%, compared with the S&P 500 index’s
SPX
14.2% gain.
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