by Donald Wood
Last updated: 7:50 AM ET, Tue October 17, 2023
Choice Hotels outlined its new proposal to acquire Wyndham
Hotels and Resorts for around $7.8 billion in cash and stock.
According to Reuters.com,
Choices effort to purchase Wyndham would create a budget hotel giant in the United
States as demand for affordable hotels remains high, especially as inflation
and recession impact consumer spending on travel.
As part of Choices proposal, Wyndham shareholders would
receive $90.00 per share, including $49.50 in cash and 0.324 shares of its common
stock for each share owned. The offer represents a 30 percent premium to
Wyndhams last closing price.
On Monday, Choice had a total market capital of $6.29
billion, while Wyndham's stood at $5.82 billion. Shares of Wyndham rose about
22 percent before the bell due to the news.
Choice Hotels President and Chief Executive Officer Patrick
Pacious released an official statement about the news of a purchase proposal
with Wyndham:?
We have long respected Wyndham's business and are confident
that this combination would significantly accelerate both Choice's and
Wyndham's long-term organic growth strategy for the benefit of all
stakeholders. For franchisees, the transaction would bring Choice's proven
franchisee success system to a broader set of owners, enabling them to benefit
from Choice's world-class reservation platform and proprietary technology to
drive cost savings and greater investment returns. Additionally, the
value-driven leisure and business traveler would benefit from the combined
company's rewards program, which would be on par with the top two global hotel
rewards programs, enabling them to receive greater value and access to a
broader selection of options across stay occasions and price points."
"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. We
were therefore surprised and disappointed that Wyndham decided to disengage.
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. Importantly, we remain convinced of both
the many benefits of the combination and our ability to complete it.
In May, a report suggested that Choice had expressed
interest in acquiring
Wyndham, according to The Wall Street Journal. The companies were not in
serious discussions at the time, but officials said then that a potential deal would
create a budget hotel franchisor that would likely be the largest in the U.S.
The report from earlier this year said that if company
officials representing Wyndham were not interested in a potential merger,
executives from Choice would appeal to Wyndhams stakeholders about a possible
deal.
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