Dive Brief:
- In a Monday statement, Wyndham’s board of directors again rejected Choice Hotels’ latest “inadequate and highly conditional” acquisition offer — which Choice made last week — and pleaded with its shareholders to not tender their shares.
- Wyndham Hotels & Resorts said the Choice proposal ignores significant regulatory and business risks. Wyndham also alleged that Choice has misled Wyndham shareholders and other stakeholders with “continued inconsistent and inaccurate statements.”
- Wyndham remains bullish that it can provide long-term shareholder value in excess of Choice’s latest bid, currently valued at $85 per share in cash and stock. Since Choice made its original bid in October, Wyndham has continuously rejected a proposed acquisition. Choice, though, said it will take all paths possible to close the deal.
Dive Insight:
Several days after Choice Hotels International made its latest offer to acquire its peer, Wyndham’s board of directors again said the proposal is not in the best interests of Wyndham and its shareholders. The board unanimously recommended that shareholders not tender their shares into the exchange offer.
“Choice has, once again, failed to address the major value gap and risks of their offer — which remains virtually unchanged from the terms outlined in their previous unsolicited proposal,” said Stephen Holmes, chairman of Wyndham’s board, in a statement.
“The core issues we have articulated remain the same: a likely prolonged regulatory review period of up to 24 months with an uncertain outcome; the pure inadequacy of the Offer from a valuation standpoint, including the significant equity component of Choice stock; and the lack of consideration for Wyndham's superior, standalone growth prospects,” Holmes added.
Those prospects include global growth potential, a record development pipeline and ancillary revenue growth opportunities, the company said.
Wyndham also noted franchisees have expressed opposition to the potential transaction, citing a recent survey by the Asian American Hotel Owners Association. Nearly 80% of Choice and Wyndham franchisees believe a merger would have a negative impact on their business, the survey of more than 1,000 AAHOA members found.
Some 75% of AAHOA members that own both Choice- and Wyndham-franchised hotels also think the merger would “hurt their business,” and 63% of dual owners said they would terminate their current agreement if given the option.
AAHOA President and CEO Laura Lee Blake previously told Hotel Dive the merger could have “frightening” consequences, particularly for Wyndham franchisees.
But Choice Hotels maintains the deal would deliver significant benefits to franchisees.
Choice will “pursue all paths available” to reach a deal with Wyndham, a company spokesperson previously told Hotel Dive, including nominating directors to Wyndham’s board to skirt current leadership.
