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Source: Wyndham Hotels and Resorts
Choice Hotels International is asking shareholders of rival chain Wyndham Hotels & Resorts to sign off on a buyout worth nearly $8 billion after Wyndham broke off negotiations after six months, the company said Tuesday.
“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, said Choice CEO Patrick Pacious. “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.”
Wyndham did not immediately respond to a request for comment early Tuesday.
Choice, based in Rockville, Maryland, is offering $49.50 in cash and 0.324 shares of Choice common stock for each Wyndham share they own, a 20% premium to Wyndham’s last closing price.
It first approached Wyndham in April, offering $80.00 per share, with 40% of that cash and 60% Choice stock, but was rejected, Choice said.
It bumped the offer to $85 per share, then to $90 per share as the board chairs and CEOs of each company met. But, according to Choice, Wyndham voiced concerns about regulatory approval in September and also the value of Choice stock.
Choice operates about 7,500 hotels in 46 countries. It’s seeking to absorb a much larger chain in Wyndham, which operates nearly 9,300 hotels under a host of brands including Days Inn, Howard Johnson, La Quinta, Ramada, Super 8 and Travelodge.
Wyndham, based in Parsippany, New Jersey, posted a profit of $355 million last year with revenue of $1.5 billion.
Like most hotels, its benefited from booming travel in recent years. Its shares are up more than 170% since its stock price tumbled close to $25 each at the start of the pandemic.
Shares of Wyndham Hotels & Resorts Inc. jumped more than 19% before the opening bell Tuesday, to $82.40.
Shares of Choice Hotels International Inc. fell more than 5%.
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