Wyndham Hotels & Resorts’ board of directors has rejected Choice Hotels International’s revised proposal to acquire the hotel company, calling Choice’s latest offer a “step backwards” in negotiations, the company said Tuesday.
Wyndham last month rejected Choice’s original cash-and-stock proposal of $90 per share, roughly totaling $7.8 billion. After a month of what Wyndham called stalled conversations, Choice in a letter to Wyndham’s board submitted an “enhanced” offer. Choice didn’t increase its per-share offer, which Wyndham calculated at about $86 per share given Choice’s lower stock price.
Choice’s offer includes $49.50 per share in cash and 0.324 shares of Choice stock.
Choice’s latest letter was not advancing the conversation, but rather “represents a step backwards despite being delivered nearly a full month after you decided to unilaterally go public with your unsolicited proposal,” Wyndham wrote in a response letter to Choice.
“Choice continues to ignore our major concerns around value, consideration mix, and asymmetrical risk to our shareholders given the uncertainty around regulatory timeline and outcome,” Wyndham chairman Stephen Holmes said in the letter.
While Choice’s latest bid represents a lower purchase point, the company did include a layer of protection for Wyndham shareholders—which Wyndham has said is required—should federal regulators deny the deal or require concessions.
Choice president and CEO Patrick Pacious in a Nov. 14 letter to Wyndham indicated Choice would include a $435 million termination fee and a “ticking fee” of 0.5 percent of the purchase per month in the case of regulatory delays. Additionally, “Choice agrees to take any actions required by antitrust regulators to close so long as such actions would not have a material adverse effect on the combined company,” according to Pacious.
This additional element, however, did not sway Wyndham. Holmes called the termination fee “low” and indicated the two-year period for Choice to obtain regulatory approvals “would both create a prolonged period of limbo and expose Wyndham and its shareholders to significant asymmetrical risk.”
