Wyndham board rejects $8B Choice Hotels buyout
Wyndham Hotels & Resorts rejected an unsolicited $8 billion buyout offer from Choice Hotels, a smaller chain that sent a letter to Wyndham shareholders Tuesday after negotiations broke down.
Wyndham, which runs Days Inn, La Quinta, Ramada and a host of other brands, said Tuesday that the proposal is “opportunistic” and undervalues its future growth potential. The offer was rejected unanimously by its board, the company said.
“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,” Wyndham Chairman Stephen Holmes said in a statement.
Holmes said Wyndham has engaged with Choice and its advisers multiple times to explore the risks of a potential deal, but realized that it would likely take more than a year to determine whether, and on what terms, the proposed transaction could clear antitrust review.
Earlier Tuesday, Choice Hotels International asked Wyndham shareholders to sign off on the proposed deal after six months of negotiations between the two broke down.
“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 Choice CEO Patrick Pacious. ”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, based in Rockville, Maryland, is offering $49.50 in cash and 0.324 shares of Choice common stock for each Wyndham share they own, a 20% premium to Wyndham’s last closing price.
Choice’s proposal allows Wyndham shareholders to choose either cash, stock, or a combination of cash and stock.
The deal has a total value of about $7.8 billion. When including debt, it’s valued at approximately $9.8 billion.