Bland French toast. Dry turkey sandwiches. A dish that might be chicken tikka masala?
17.10.2023 - 15:55 / forbes.com / Patrick Pacious
On Tuesday, Choice Hotels announced its hostile bid to acquire all the outstanding shares of competitor Wyndham Hotels & Resorts at a price of $90 a share. The cash and stock deal assumes a $7.8 billion valuation for Wyndham. Including assumed debt, the deal value would climb to around $9.8 billion.
The offer is significantly higher than the $80-per-share offer Wyndham rejected in April. In mid-May, Choice upped its offer to $85 per share before proposing a “best and final” offer of $90 per share in August.
A successful acquisition would be a massive merger in the budget hotel chain space, combining the fifth- and sixth-largest hotel groups in North America to create the continent’s largest budget hotel franchisor. Wyndham describes itself as the largest hotel franchisor in the world, with 9,280 locations across 24 brands in 95 countries. The stable runs the gamut from economy chains like Days Inn and Super 8 to mid-range brands like Ramada and La Quinta to upscale hotels like the eponymous Wyndham. Choice Hotels operates nearly 7,500 properties spanning 22 brands, including Comfort Inn and Quality Inn.
By late summer, Wyndham was reportedly cooling on talks and raising questions regarding the value of Choice stock as well as the timing for obtaining regulatory approvals.
In a letter to the Wyndham board on August 21, Choice CEO Patrick Pacious wrote, “We are perplexed by your obvious resistance to a frank and open commercial dialogue in light of the compelling value we are offering your shareholders, including the opportunity to participate in the future value creation of the combined company.”
In a statement, Choice said it is making this proposal public following Wyndham’s decision to pull out of negotiations, following nearly six months of dialogue. “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. Importantly, we remain convinced of both the many benefits of the combination and our ability to complete it,” wrote Pacious.
Wyndham Hotels did not respond to Forbes’ multiple requests for comment.
The current offer represents a 17% premium to Wyndham’s stock price as of 10:30 a.m. on Tuesday morning. Under the proposal, Wyndham shareholders would receive $49.50 in cash per share and 0.324 shares of Choice common stock per share.
In a note to investors, Michael Bellisario, senior research analyst at Baird, wrote: “Strategically, we continue to believe a merger makes long-term sense; financially, the pro forma leverage profile is quite high,” adding that “synergies are a big driver in
Bland French toast. Dry turkey sandwiches. A dish that might be chicken tikka masala?
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On a third-quarter earnings call Thursday morning, Wyndham Hotels & Resorts outlined for investors its rationale for rejecting a $7.8 hostile takeover bid from budget-hospitality rival Choice Hotels. Including assumed debt, the deal value would climb to around $9.8 billion.
Wyndham’s executives talked at length Thursday about why they wouldn’t accept the unsolicited bid from Choice Hotels – a $9.8 billion buyout offer after assuming debt.
Choice Hotels on Wednesday called on Wyndham Hotels & Resorts to return to merger talks while publicly responding to concerns Wyndham executives had raised about “execution risk” — including questions about regulatory scrutiny.
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