Wyndham Hotels & Resorts has rejected an unsolicited $8 billion buyout by bid Choice Hotels International, Inc., saying it is not in the best interests of Wyndham shareholders.
Noting that it is the world’s largest hotel franchising company, with 9,100 hotels in more than 95 countries, Wyndham called the proposal “involves significant business and execution risks, including an extended regulatory timeline and uncertainty of outcome, potential franchisee churn, and excessive leverage levels at the pro forma combined company.”
It would take more than a year to determine if the merger of the two companies could clear antitrust review, Wyndham said in a statement to shareholders, that likely would cause franchisee churn. The statement also noted “our deep concerns about the value of their stock,” which would make up 45% of the purchase.
“Choice’s offer is insufficient relative to Wyndham’s recent trading levels, significant growth momentum and premiums paid in a precedent change of control transactions,” Wyndham said, noting its rapidly growing pipeline, which is up 20% over the past two years.
Wyndham operates Days Inn, La Quinta, Ramada and other hotel brands. Its newest brand, ECHO Suites Extended Stay by Wyndham, signed 265 contracts since its launch in March 2022. Choice Hotels, meanwhile, last year acquired Radisson Hotels; it now operates about 7,500 hotels in 46 countries.
The two companies have been talking merger for six months, and the deal is not done yet.
“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,” Choice CEO Patrick Pacious said in a statement. “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.”
