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Choice Hotels
is making a hostile bid for
Wyndham
Hotels & Resorts, appealing directly to shareholders after failing to convince management.
It’s the latest move in a long-running attempt to acquire the rival budget-hotel chain. In October, Wyndham’s board unanimously rejected a proposal that would have valued the firm at nearly $8 billion. Wyndham broke off discussions following the proposal after almost six months of negotiations.
The hostile offer is the same as the one that Choice made to the board then—$90 a share for Wyndham holders in a combination of cash and Choice stock.
“While we would have preferred to come to a negotiated agreement, the Wyndham Board’s refusal to explore a transaction has left us with no choice but to take our proposal directly to Wyndham’s shareholders,” said Choice CEO Patrick Pacious in a news release. “It remains our goal to reach a mutually agreeable transaction.”
In a separate statement Tuesday, Wyndham said Choice’s proposal had a risk of not being approved by regulators and undervalued the company and its growth prospects. It also noted the high amount of leverage that would be required for the deal.
Choice also said Tuesday that it already has about $110 million in Wyndham stock. The company said it is starting the regulatory approval process and is considering candidates to nominate to Wyndham’s board.
Wyndham argued in negotiations that a merger would place too much debt on the combined group, The Wall Street Journal reported. Choice said that a tie-up would allow it to better compete with rivals
Marriott
and
Hilton.
Wyndham stock rose 1.6% as the market opened Tuesday.
Choice Hotels
was up 0.1%.
Write to Brian Swint at brian.swint@barrons.com
Read the full article here
