Oct. 17 (UPI) — Wyndham Hotels & Resorts witnessed a surge of over 6% in its stock price during afternoon trading on Tuesday, while Choice Hotels experienced a decline of more than 5% after Wyhndham rejected an unsolicited $8 billion buyout offer from Choice Hotels.
The total value of the deal would have reached $9.8 million when accounting for assumed debt.
In a prepared statement, Wyndham Chairman Stephen Holmes stated, “Choice’s offer is underwhelming, highly conditional and subject to significant business, regulatory and execution risk. Choice has been unwilling or unable to address our concerns.”
Wyndham, the operator of various hotel brands including Days Inn, La Quinta, and Ramada, referred to the proposal as “opportunistic” and undervaluing its potential for future growth. According to the company’s statement, the board unanimously rejected the offer.
Choice Hotels, which operates approximately 7,500 hotels across 46 countries, is seeking to acquire the larger chain of Wyndham.
The proposed deal would result in a significant merger within the budget hotel market, bringing nearly 17,000 properties, including familiar names such as Radisson, Quality Inn, and Travelodge, under the Choice umbrella.
Choice offered $90 per share, representing a 30% premium over Monday’s closing share price. This translates to $49.50 per share and 0.324 shares of Choice common stock.
The two companies had been engaged in discussions for months, but negotiations were halted by Wyndham, leading Choice to present its unsolicited offer.
Holmes stated that the company concluded any deal with Choice could take up to a year to pass antitrust review, which, among other factors, diminished his enthusiasm for future negotiations.
Earlier on Tuesday, after six months of contentious discussions, Choice asked Wyndham shareholders to approve the deal.
Choice CEO Patrick Pacious expressed disappointment in Wyndham’s decision to disengage, stating, “A few weeks ago, Choice and Wyndham were close on price and consideration, and both parties recognized the value opportunity of this potential transaction. While we would have preferred to continue discussions with Wyndham privately, since they declined to proceed, we believe there is too much value for both companies’ franchisees, shareholders, associates, and guests to not pursue this transaction further.”
Despite Wyndham’s rejection, some analysts acknowledged the respectability of Choice’s offer. C. Patrick Scholes from Truist Securities informed clients that he believes Choice made an attractive offer, but Holmes, an experienced figure in mergers and acquisitions, may be strategically waiting for a better offer from Choice or another interested party.
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