Choice Hotels International Inc. launched a hostile takeover bid for Wyndham Hotels & Resorts Inc. after Wyndham rejected a previous offer from Choice. Choice Hotels stated that the deal would provide Wyndham shareholders with $49.50 in cash plus shares of Choice common stock and other financial incentives for each share they own. The Wyndham board previously rejected this proposal, considering it a “step backward.”
What is Choice offering Wyndham shareholders?
Choice Hotels announced that it is offering investors $49.50 in cash and 0.324 shares of Choice common stock for each share of Wyndham they own. Based on the closing price of Choice Hotels shares when the company initially made the offer on October 16, this would amount to nearly $90 per share, representing a 30% increase over Wyndham’s share price of $69.10 at that time. Additionally, the proposal includes “tremor fees” to compensate for offer delays of 45 cents per Wyndham share per month, totaling $38 million per month, which will accrue daily starting one year after the majority of Wyndham shares are submitted in the offer. Based on these figures, analysts estimate the deal’s value at about $7.8 billion. Choice also revealed that it owns 1.5 million shares of Wyndham worth approximately $110 million.
Choice Hotels does not accept rejection
Choice Hotels noted that on November 14, it presented the same offer, along with two seats on the board of the merged company for Wyndham. A week later, the Wyndham board rejected this offer, deeming the proposal a “step backward” and not in the shareholders’ best interest. Patrick Pacious, CEO of Choice Hotels, stated that the company preferred to reach a negotiated agreement, but “the Wyndham board’s refusal to explore the deal forced us to present our proposal directly to Wyndham shareholders.” If approved, the merged company would own more than 16,000 property assets worldwide. Choice Hotels stated that the offer will expire on March 8, 2024, unless extended or terminated. Shares of both Wyndham Hotels & Resorts and Choice Hotels International fell on Tuesday following the announcement of the offer.
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Article sources: Investopedia, Choice Hotels International, PRNewswire
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