AH_224_Dec-Jan-2024
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www.asianhospitality.com
DECEMBER/JANUARY 2024 ASIAN HOSPITALITY
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
date.
“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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