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Wyndham Hotels & Resorts reportedly declined a $9.8 billion acquisition bid proposed by Choice Hotels. The New Jersey-based hotel chain company was said to have turned down the proposal as soon as the latter publicly announced its buyout offer on Tuesday, Oct. 17.
Wyndham Hotels operates a number of lodging establishments, such as Days Inn and Ramada, and after receiving the takeover bid from Choice Hotels, it labeled the proposal as an “opportunistic” move. The company also said the attempt simply undervalues its growth potential.
Reason for the Rejection of Bid
Choice Hotels revealed its multi-billion bid after the negotiations failed. It was said that talks have been going on for six months already.
Associated Press News reported that Wyndham Hotels’ board unanimously rejected the proposal and made this decision for a number of reasons, such as the requirement for antitrust clearance.
It is offering $49.50 in cash and 0.324 shares of Choice common stock for every Wyndham share they own. On top of this, a 20% premium to the hotel chain’s last closing price is on the table as well. The deal’s total value was around $7.8 billion, but with the addition of debt, it is valued at $9.8 billion despite this, Wyndham did not accept the offer.
“Choice’s offer is underwhelming, highly conditional and subject to significant business, regulatory and execution risk,” Stephen Holmes, the hotel company’s chairman said in a statement. “Choice has been unwilling or unable to address our concerns.”
Public Announcement of Takeover Proposal
As per Bloomberg, Choice Hotels decided to take its offer public after Wyndham decided to drop the negotiations that began in April. Wyndham is still arguing that the deal will entail many risks if they decide to push through.
"A few weeks ago, Choice and Wyndham were in a negotiable range on price and consideration, and both parties have a shared recognition of the value opportunity this potential transaction represents,” Choice Hotel’s president and CEO, Patrick Pacious, said in a press release. "Were surprised and disappointed that Wyndham decided to disengage."
He went on to explain, "While we would have preferred to continue discussions with Wyndham in private, following their unwillingness to proceed, we feel there is too much value for both companies' franchisees, shareholders, associates, and guests to not continue pursuing this transaction.”
Photo by: Choice Hotels Press Release
