Wyndham rejects Choice Hotels' lowered $86/share takeover bid

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Wyndham rejects Choice Hotels' lowered $86/share takeover bid
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Wyndham Hotels & Resorts (NYSE: WH ) has turned down a revised acquisition offer from Choice Hotels International (NYSE:NYSE: CHH ), with Chairman Stephen P. Holmes labeling the $86 per share bid as a "step backwards." The bid was not only lower than the previous $7.8 billion proposal made on October 17 but also did not align with the interests of Wyndham's shareholders, according to a statement released today.

The board's decision to reject the offer was influenced by several factors, including the undervaluation of Wyndham's growth prospects and concerns over the high-leverage impact on Choice's share value. Holmes highlighted substantial risks due to regulatory uncertainties, which could potentially harm Wyndham's business operations during the prolonged approval process, such as development issues for its ECHO Suites brand.

Wyndham's response also addressed feedback from the Asian American Hotel Owners Association (AAHOA) against the deal and pointed out that the proposed protections from Choice—like a $435 million reverse termination fee and a monthly regulatory ticking fee of 0.5% after one year—did not sufficiently mitigate these concerns. Furthermore, Choice had not significantly adjusted their initial cash plus stock valuation since their offer on October 17.

Holmes emphasized that Wyndham remains open to considering serious proposals that adequately reflect the company's valuation, provide a suitable compensation mix for shares, and eliminate prolonged uncertainty that could be detrimental to its operations and inadvertently benefit competitors like Choice.

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