Wyndham Hotels Turns Down Another Acquisition Attempt By Choice Hotels

Wyndham Hotels & Resorts Inc WH said its Board of Directors received a letter from Choice Hotels International, Inc CHH on November 14, 2023, which represented a step backwards in the merger and acquisition talks.

The budget hotel operator said the terms of acquisition Choice outlined in the letter are not in the best interests of Wyndham or its shareholders.

The letter is Choice's first communication in a month since its public disclosure of its unsolicited proposal to acquire Wyndham.

The letter, according to Wyndham, contains no change to the form of financial consideration and continues to undervalue Wyndham's standalone growth prospects. 

At Choice's current share price, its offer to acquire all outstanding shares of Wyndham stands at a value of $86 per share, below the nominal value of $90 per share proposed on October 17, 2023, due to a decline in Choice shares since the takeover offer.

In October, Choice made its $7.8 billion offer to acquire Wyndham worth $49.50 a share in cash and the rest in stock, amounting to a 30% premium at the time. 

The latest letter proposes a two-year period for Choice to seek to obtain regulatory approvals for the acquisition supported only by a low 6% reverse termination fee if the deal does not go through.

Wyndham said the 6% fee would only create a prolonged period of limbo and expose Wyndham and its shareholders to significant asymmetrical risk.

"Given they now explicitly acknowledge the legitimate issues around the regulatory timeline, they are essentially asking our shareholders to take on serious risk and accept as compensation for a failed deal a low reverse termination fee that doesn't even begin to compensate for the potential lost earnings and long-term impairment to value that could occur during an uncertain two-year regulatory review," said Chairman of the Wyndham Board of Directors Stephen P. Holmes.

"They have instead chosen to prolong this for months with a proposal that remains unfeasible, damaging to our business, and unnecessarily distracting to our management team."

Price Action: WH shares closed lower by 0.80% at $77.33 on Tuesday.

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