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hoice Hotels International in

December continued its bid

to acquire Wyndham Hotels

& Resorts after twice being rejected

by Wyndham’s board of directors.

Choice launched an exchange offer

“to present its compelling proposal

directly to Wyndham shareholders”

and plans to nominate its own

candidates for Wyndham’s board.

However, Wyndham’s board

continues its refusal to accept the

offer, saying it remains substantially

the same as the last bid it rejected

and does not address the board’s

concerns about the deal’s

regulatory viability and benefits

to stockholders. It also said in a

statement that Choice currently owns less

than 1.7 percent of Wyndham common

stock and is “restricted from further

purchases without antitrust approval.”

Pressing its case

In its own statement released in

December, Choice said it had decided to its

“compelling proposal” was too important

for both companies to let go.

“Choice continues to believe that

a transaction with Wyndham is pro-

competitive and would generate value for

both Wyndham and Choice shareholders

as well as deliver significant benefits to

franchisees, guests and associates of both

companies,” the company said.

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.

Among the changes proposed are:

Reverse termination fee of $435 million,

or approximately 6 percent of the total

equity purchase price.

A regulatory ticking fee of 0.5 percent of

the total equity purchase price per month.

Choice agrees to an outside date 12

months post-signing of a definitive

agreement, with two 6-month extensions

exercisable by either party, if regulatory

approvals have not been obtained by such


“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 Patrick Pacious, Choice’s

president and CEO.

Choice also announced that it currently

holds approximately 1.5 million shares

of Wyndham common stock, valued at

more than $110 million. The company has

filed forms under the Hart-Scott-Rodino

Antitrust Improvements Act of 1976 with

the U.S. Federal Trade Commission to

begin the approval process, and it is taking

another step aimed at changing Wyndham’s

position on the merger.

Choice intends to nominate a slate of

directors to Wyndham’s board at that

company’s 2024 Annual Shareholder

Meeting. In late December, Choice released

another statement saying Wyndham was

mischaracterizing its offer.

“Wyndham’s comments call into

question their ability to properly

support franchisees while also

generating shareholder value through

M&A,” the Choice statement said.

“The U.S. Federal Trade Commission

will come to its own independent

assessment of the proposed

transaction’s competitive merits based

on the specific facts, like it does on

every M&A transaction. Attempting

to use the FTC to prevent Wyndham

shareholders from even accessing

the option of a merger with Choice

robs them of meaningful upside from

the combination or, at a minimum,

the substantial break-fee Choice

has offered in the unlikely event the

transaction were not to receive the requisite

regulatory clearance.”

The answer is still no

Wyndham’s board acknowledged Choice’s

latest offer but it remains unmoved in its

opposition to it.

“Choice has, once again, failed to address

the major value gap and risks of their

offer – which remains virtually unchanged

from the terms outlined in their previous

unsolicited proposal,” said Stephen Holmes,

chairman of the board. “The core issues we

have articulated remain the same: a likely

prolonged regulatory review period of up to

24 months with an uncertain outcome; the

pure inadequacy of the offer from a valuation

standpoint, including the significant equity

component of Choice stock; and the lack

of consideration for Wyndham’s superior,

standalone growth prospects.”

Those concerns include the risk

to Wyndham shareholders given the

uncertainty around antitrust approval

withing a 24-month timeline; he

undervaluation of Wyndham’s standalone

growth prospects; and he value of Choice

shares relative to its growth prospects.

Wyndham’s board said it would advise

shareholders of its recommendation

regarding the offer within 10 business days

from Choice’s last offer.

“Wyndham shareholders are urged

not to take any action with respect to

the offer until the board announces its

recommendation,” the board said.

Choice continues its pursuit of

Wyndham, launches exchange offer

Wyndham board says offer isn’t in shareholders’ best interests

Choice Hotels International is continuing its bid to acquire Wyndham

Hotels & Resorts despite two rejections by the latter’s board of

directors. Choice has launched an exchange offer and plans to

nominate candidates for Wyndham’s board.

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