CHOICE HOTELS INTERNATIONAL ended its bid to acquire Wyndham Hotels & Resorts after its exchange offer expired Friday. Both companies released statements saying they will now focus on their standalone strategies.
Choice also announced that it would withdraw its nominees for Wyndham’s board of directors. Last week it made a last effort to encourage Wyndham shareholders to tender shares for the acquisition but still failed to gather sufficient support for the deal.
“Since beginning this process in April 2023, Choice has attempted to engage in good-faith negotiations with Wyndham through numerous different avenues, including increasing the proposed offer multiple times and expressing an openness to further enhancing the offer with due diligence, offering a one-way NDA to share its confidential information with Wyndham, and offering above-market regulatory protections,” the company said. “Given Wyndham’s refusal to constructively and substantively engage on terms, Choice took the extraordinary step of launching the exchange offer to initiate the regulatory review process and engage with Wyndham stockholders. While the support from Wyndham stockholders tendering into the exchange offer was significant considering the number of investors structurally prevented from participating at this stage, it was not sufficient for Choice to conclude – particularly when taking into account the Wyndham board’s obvious continuing disinterest in a combination – that a path towards a transaction is available at this time.”
Wyndham’s board released its own statement welcoming Choice’s decision not to renew the exchange offer.
“The Wyndham Board is pleased that Choice has ended its hostile pursuit and proxy contest, following the expiration of its unsolicited exchange offer,” said Stephen Holmes, chairman of the board. “We are confident in Wyndham’s standalone strategy and growth prospects under the leadership of our proven management team. The board remains committed to acting in the best interests of our shareholders and driving superior long-term value creation.”
Geoff Ballotti, Wyndham’s president and CEO, also said the company would move forward on its own strategic plan.
“We look forward to doing so without the unnecessary distraction of this situation and disruption to our business,” Ballotti said. “We would like to thank our shareholders and franchisees for their continued support and our team members for their dedication and focus throughout this process.”
Also, Choice’s board of directors approved an increase in the number of shares authorized under its share repurchase program by five million shares for a total authorization of approximately 6.8 million shares. The company projects its adjusted EBITDA will increase approximately 10 percent at the midpoint of guidance.
In its original proposal, made public in October, Choice said it sought to acquire all the outstanding shares of Wyndham at a price of $90 per share and shareholders would have received $49.50 in cash and 0.324 shares of Choice common stock for each Wyndham share they own. Choice claimed that is a 30 percent premium to Wyndham’s 30-day volume-weighted average closing price ending on Oct. 16, an 11 percent premium to Wyndham’s 52-week high, and a 30 percent premium to Wyndham’s latest closing price.
Wyndham’s board unanimously rejected Choice’s proposal, calling it unsolicited, “highly conditional” and not in the best interest of shareholders. On Nov. 14, however, Choice sent a letter to the Wyndham board with an “enhanced proposal” intended to address Wyndham’s concerns about clearing federal regulations. On Dec. 12, Choice launched its public exchange offer to acquire Wyndham and on Dec. 19 the Wyndham board officially rejected the offer and urged shareholders not to tender shares for the deal.
