Choice Hotels Offers $7.8 Billion for Wyndham
Choice Hotels International today announced a proposal to acquire all the outstanding shares of Wyndham Hotels & Resorts at a price of $90.00 per share, payable in a mix of cash and stock. Choice Hotels is asking Wyndham shareholders to sign off on the buyout, which would be worth nearly $8 billion, after Wyndham broke off negotiations.
Under Choice’s proposal, the $90.00 per share to be received by Wyndham shareholders would consist of $49.50 in cash and 0.324 shares of Choice common stock for each Wyndham share they own. Choice’s proposal represents a 26% premium to Wyndham’s 30-day volume-weighted average closing price ending on October 16, 2023, an 11% premium to Wyndham’s 52-week high, and a 30% premium to Wyndham’s latest closing price.
In addition, Choice’s proposal includes a cash or stock election mechanism, which would provide Wyndham shareholders with the ability to choose either cash, stock, or a combination of cash and stock consideration, subject to a customary proration mechanism.
The proposal implies a total equity value for Wyndham of approximately $7.8 billion on a fully diluted basis. With the assumption of Wyndham’s net debt, the proposed transaction is valued at approximately $9.8 billion.
Patrick Pacious, President and Chief Executive Officer of Choice Hotels, said, “We have long respected Wyndham’s business and are confident that this combination would significantly accelerate both Choice’s and Wyndham’s long-term organic growth strategy for the benefit of all stakeholders. For franchisees, the transaction would bring Choice’s proven franchisee success system to a broader set of owners, enabling them to benefit from Choice’s world-class reservation platform and proprietary technology to drive cost savings and greater investment returns. Additionally, the value-driven leisure and business traveler would benefit from the combined company’s rewards program, which would be on par with the top two global hotel rewards programs, enabling them to receive greater value and access to a broader selection of options across stay occasions and price points.”
“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. 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. Importantly, we remain convinced of both the many benefits of the combination and our ability to complete it,” concluded Pacious.
Choice first approached Wyndham in April, offering $80.00 per share, with 40% of that cash and 60% Choice stock, but was rejected. It bumped the offer to $85 per share, then to $90 per share. But 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 with 20 hotel brands, including Baymont, Days Inn, Howard Johnson, La Quinta, Ramada, Super 8, Travelodge, and Wyndham. The company posted a profit of $355 million last year with revenue of $1.5 billion.
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