WH - Choice Hotels resorts to a hostile bid to take over Wyndham Hotels

2023-10-17 12:10:48 ET

Wyndham Hotels & Resorts Inc (NYSE: WH) jumped more than 10% today after Choice Hotels International Inc (NYSE: CHH) announced a hostile bid to takeover the world’s largest hotel franchiser.

Choice CEO discussed the hostile bid on CNBC

Choice Hotels has valued the hotel company at $9.8 billion (including debt) or $90 per share – a 30% premium on its previous close.

The Rockville-headquartered firm said it decided to make its proposal public this morning after Wyndham opted to disengage from talks that were ongoing since April of 2023. On CNBC’s “ Squawk Box ”, its CEO Patrick Pacious said today:

We think it creates a leading hotel platform that brings a lot of value to our franchisees, our guests, and we think it’s a real opportunity for both sets of shareholders.

Last year, Choice also spent about $675 million to acquire Radisson Hotel Group Americas. The hotel stock is down nearly 5.0% at writing.

Choice doesn’t plan on raising its bid any further

Choice has proposed to pay more than half ($49.50) to Wyndham shareholders in cash and the remaining in stock – and has no plans of raising the bid any further than $90 a share.

On Tuesday, its Chief Executive invited Wyndham Hotels to “re-engage” in discussions, reiterating that the offer is “compelling” with synergies that will likely realise rather quickly.

He’s convinced that the combination will also result in “lower operating costs” and a better rewards programme. But Wyndham is convinced that the proposal not only undervalues its business but will likely attract regulatory scrutiny as well.

Before the development on Tuesday, Wyndham stock was trading at roughly the same price at which it started 2023.

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