Choice Hotels has announced the abandonment of its aggressive pursuit of a hostile $8 billion takeover bid for Wyndham Hotels & Resorts. Despite garnering support from some Wyndham shareholders, Choice has concluded that the endeavor lacks sufficient backing, especially in light of the vehement opposition from the Wyndham board to any potential merger.
Choice's decision comes after facing resistance not only from the Wyndham board but also from hotel franchisees, marking a significant setback in its efforts to expand its portfolio through acquisition. The company's hostile takeover offer, launched in December, aimed to merge with the rival hotel chain, which operates renowned brands like Days Inn, La Quinta, and Ramada.
The exchange offer made by Choice to Wyndham shareholders, comprising $49.50 in cash and 0.324 shares of Choice common stock per Wyndham share, expired on Friday. Additionally, Choice has withdrawn its slate of director nominees for Wyndham's board, signaling a complete cessation of its pursuit.
In a prepared statement, Choice expressed its commitment to refocus on its standalone strategy, asserting confidence in its ability to generate substantial long-term value for its stockholders and franchisees. This move underscores Choice's determination to pivot its growth trajectory in the wake of the failed takeover attempt.
Wyndham Chairman Stephen Holmes welcomed Choice's decision to end its hostile pursuit, emphasizing the confidence in Wyndham's standalone strategy and growth prospects. The board remains steadfast in its dedication to safeguarding the interests of shareholders and fostering superior long-term value creation.
Choice's pursuit of Wyndham dates back to October, when Wyndham rebuffed an unsolicited $8 billion buyout offer, citing concerns over undervaluation and regulatory risks. Despite ongoing negotiations, Choice struggled to address Wyndham's apprehensions, leading to the eventual collapse of the proposed merger.
The Biden administration's robust stance on antitrust reviews has added a layer of complexity to corporate mergers and acquisitions across various sectors. The heightened scrutiny underscores the need for companies to navigate regulatory hurdles diligently.
Choice Hotels International Inc., headquartered in Rockville, Maryland, operates approximately 7,500 hotels globally, while Wyndham boasts a network of over 9,000 hotels, encompassing popular brands such as Howard Johnson and Super 8. The fluctuation in stock prices following Choice's announcement reflects the market's response to the developments.
In summary, Choice Hotels' decision to withdraw its hostile takeover bid for Wyndham marks a significant turn of events in the hospitality industry, underscoring the challenges and complexities inherent in corporate mergers amidst evolving regulatory landscapes and strategic considerations.
Source: ABC News
Photo: CoStar