Choice Hotels International is seeking approval from Wyndham Hotels & Resorts shareholders for an almost $8 billion buyout, following the breakdown of negotiations.
Choice’s CEO, Patrick Pacious, expressed disappointment in Wyndham’s decision to disengage, emphasizing the potential value in the transaction for both companies. Choice’s offer includes $49.50 in cash and 0.324 shares of Choice common stock for each Wyndham share, providing a 20% premium to Wyndham’s last closing price.
The proposal allows Wyndham shareholders to opt for cash, stock, or a combination of both and offers two board seats to Wyndham in the merged entity. The deal’s total value stands at around $7.8 billion, or approximately $9.8 billion when considering debt.
Choice Hotels initially approached Wyndham with an offer of $80.00 per share, with 40% in cash and 60% in Choice stock, which was declined. Subsequently, they increased the offer to $85 and then $90 per share as top executives from both companies met. However, Wyndham raised concerns about regulatory approval in September and questioned the value of Choice stock.
Choice Hotels, with around 7,500 hotels in 46 countries, is looking to acquire the larger Wyndham chain, which operates nearly 9,300 hotels under various brands such as Days Inn, Howard Johnson, La Quinta, Ramada, Super 8, and Travelodge. Wyndham, based in Parsippany, New Jersey, reported a profit of $355 million and revenue of $1.5 billion in the previous year, benefiting from increased travel, though travel demand has slightly cooled in the wake of inflation concerns and more cautious spending by travelers.
Wyndham Hotels & Resorts Inc. saw its shares surge over 15% to $82.40, while Choice Hotels International Inc. experienced a decrease of over 2% in its share price.
(Source: Associated Press)
