by Donald Wood
Last updated: 8:40 AM ET, Thu October 26, 2023
Choice Hotels International is calling on the board of
directors of Wyndham Hotels & Resorts to engage in good faith discussions
regarding a possible sale.
Earlier this month, Choice Hotels its proposal to acquire
Wyndham for around $7.8
billion in cash and stock, a move that would create a budget hotel giant in
the United States as demand for affordable hotels remains high, especially as
inflation and recession impact consumer spending on travel.
After consulting financial and legal advisors, Wyndham’s Board
of Directors reviewed Choice’s proposal and determined it was not in the
best interest of shareholders to accept. Choice offered Wyndham $90 per share,
comprised of 45 percent in stock and 55 percent in cash.
Choice believes its existing offer rewards Wyndham
shareholders more than the present value that could be achieved through a standalone
plan. From 2019 to 2022, Choice's unique strategy generated adjusted EBITDA
growth of 28 percent compared to Wyndham's six percent.
Choice President and Chief Executive Officer Patrick Pacious
released a statement on the company’s desire to engage in constructive
conversation with Wyndham officials:
“We appreciate the positive feedback we have received since
first making our proposal public, particularly the support from both companies'
shareholders and franchisees. Through our conversations with these
stakeholders, we are encouraged by their clear understanding of the natural fit
of the two businesses and belief in the combined company's ability to drive
greater shareholder returns, franchisee profitability, and strategic benefits.
They, and others, share our perspective that a transaction is pro-competitive,
has a clear path to completion, and creates a combined company with a strong
free cash flow profile to support both rapid deleveraging and investments for
growth.”
“We respect Wyndham's desire to achieve the best outcome for
its shareholders, but that can't happen if Wyndham unilaterally ends our
discussions. Both companies' shareholders have expressed to us their
understanding of the tremendous value this combination could deliver. As
recently as a few weeks ago, Wyndham prepared a critical information request
list, on which both parties broadly aligned, to help Choice and Wyndham close
any remaining value gaps. Wyndham then disengaged before any information was exchanged.
We therefore strongly urge Wyndham to return to the discussions. Choice is
ready to move expeditiously to negotiate binding terms, including mechanisms to
provide market standard protections for Wyndham shareholders.”
For the latest travel news, updates and deals, subscribe to the daily TravelPulse newsletter.
Topics From This Article to Explore
