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Spurned Choice Hotels Brings Its Takeover Bid To Wyndham Shareholders
12.12.2023 - 15:13 / forbes.com / Patrick Pacious
Never mind that its $7.8 billion hostile takeover bid for Wyndham Hotels & Resorts was publicly spurned in October or that three other proposals have also been rejected. Suitor Choice Hotels now wants to take a new offer directly to Wyndham shareholders.
Choice had previously offered to buy Wyndham four times over a six-month period, starting with an bid of $80 per share in April, then $85 in May and $90 in August. Last month, Choice tried again with a $86-per-share offer, which Wyndham characterized as “a step backwards.”
Choice announced Tuesday that it is launching an exchange offer to acquire Wyndham for $49.50 in cash and 0.324 shares of Choice common stock per Wyndham share, representing a value of $40.50 based on Choice’s trading price as of October 16, 2023. “The proposed offer price equates to a 30% premium to Wyndham’s closing share price of $69.10, and reflects a 14.9x multiple of Wyndham's consensus 2023 adjusted EBITDA estimate, a forward multiple Wyndham has never achieved, absent COVID disruptions,” Choice’s statement reads.
“The offer proposed by Choice appears unchanged from the terms outlined in a letter to Wyndham dated November 14, 2023 and is currently valued at approximately $86 per share,” Wyndham replied in its own statement, noting that its board will carefully evaluate an offer that “looks to be unchanged from Choice's previous highly conditional offer the board reviewed and rejected, which failed to address the serious concerns repeatedly expressed by Wyndham.”
Since Choice’s takeover aspirations became public in October, its share price has fallen 11%, while, during the same period, Wyndham’s share price has climbed 10% and was at $79.86 before markets opened on Tuesday.
Choice said it would have preferred a negotiated agreement, but the Wyndham board is refusing to explore a deal, so it has no choice but to take its offer directly to shareholders. “Wyndham chose to publicly reject our last proposal without any engagement even after we addressed their concerns, including adding significant regulatory protections for their shareholders,” said Choice CEO Patrick Pacious in a statement.
Were the merger to go through, it would be a massive realignment of the economy hotel chain landscape, with the sixth-largest hotel group in North America acquiring the fifth-largest to create the continent’s largest budget hotel franchisor.
Choice Hotels operates nearly 7,500 properties spanning 22 brands, including Comfort Inn and Quality Inn. Meanwhile, Parsippany, New Jersey-based Wyndham calls itself the largest hotel franchisor in the world, with 9,280 locations across 24 brands in 95 countries. The Wyndham stable runs the gamut from economy chains like Days Inn and Super 8 to mid-range
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