Wyndham Hotels & Resorts’ board urges shareholders to reject Choice offer

Wyndham Hotels & Resorts’ board of directors has urged its shareholders to reject Choice Hotels’ conditional exchange offer—and recommends that the shareholders not tender any of their shares into the offer.

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Wyndham Hotels & Resorts’ board of directors has unanimously determined the exchange offer from Choice Hotels International, Inc. to acquire all outstanding shares of Wyndham is not in the best interests of Wyndham and its shareholders.

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 P. 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.“

Holmes continued, We are confident Wyndham can deliver long-term shareholder value well in excess of the $85 per share offered by Choice by continuing to execute on our existing business plan. The Board is steadfast in our recommendation that shareholders not tender their shares into this offer, and we remain fully committed to acting in the best interests of all Wyndham shareholders.” 

Wyndham’s board of directors says that it conducted a review of the offer and recommends shareholders reject the offer, giving the following reasons:

  • The offer involves an uncertain regulatory timeline and outcome and does not provide sufficient protections and compensation for the asymmetrical risks Wyndham shareholders would face.

  • Choice’s offer would create the largest U.S. provider of hotel franchise services in the chainscales that serve middle-income guests — economy and midscale — with over 55 per cent market share in each, resulting in significant uncertainty as to whether the FTC or courts would ever clear the transaction.

  • New business development disruption and deterioration in segment-leading retention rates resulting in impaired earnings growth; 

  • Competitors (including Choice) capitalizing on franchisee uncertainty; 

  • Stagnated development of Wyndham’s fast-growing ECHO Suites brand; and 

  • Increased employee turnover and reduced ability to attract and retain team members.

  • The Wyndham Board believes the Company can deliver long-term shareholder value in excess of the $85 per share offered by Choice by continuing to execute on its existing business plan.

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