Choice is confident it can sell its offer to Wyndham shareholders without the opinion of Wyndham executives.
Choice Hotels launched a bid Tuesday to acquire Wyndham Hotels & Resorts for $90 a share – a hostile offer that would create the largest budget hotel franchise in North America. Wyndham has rejected Choice’s bid.
This is only Choice’s latest move – its run at Wyndham goes back to the spring. Both Choice and Wyndham released lengthy documents Tuesday that detailed their version of events.
Choice says it is making a fair offer; Wyndham is stressing the offer was unsolicited and undervalues its business.
Below is a timeline based on their documents and Skift’s reporting.
April 2023: Choice Makes First Offer for Wyndham
On April 28, Choice made its first offer to acquire Wyndham. The bid: $80 per share with 40% in cash and 60% in Choice shares.
May: Wyndham Rejects First Offer, Choice Tries Again
On May 9, Wyndham responded to Choice’s first offer, stating it “substantially undervalued Wyndham. relative to its standalone prospects,” according to a document released by Wyndham on Tuesday.
On May 15, Choice raised its asking price to $85 per share, with 55% in cash and 45% in Choice shares. Choice also offered Wyndham the option to “participate in the merged company’s governance,” it said in a document released Tuesday.
On May 29, Wyndham rejected the offer, stating it would “undervalue Wyndham and put the value of a combined company at risk given the high level of contemplated debt.”
May: Offers Leak in Media
News of the proposed merger leaked to the public. On May 23, the Wall Street Journal reported that Choice was seeking to buy Wyndham. That news “really impacted the price of both companies’ shares,” said Choice Hotels CEO Patrick Pacious on CNBC Tuesday.
Analysts doubted Choice was serious about merging with Wyndham. Choice and Wyndham declined to confirm the report.
June: Choice and Wyndham Executives Talk More
On June 22, Wyndham and Choice’s respective Board Chairs and CEOs meet to discuss the second offer.
July: Choice Publicly Hints at Interest in a Merger
Choice surprised analysts with a business update forecasting higher-than-expected earnings, suggesting it’s going to make a significant financial move. Wyndham shares subsequently soared in value.
On July 27, Wyndham reported weaker profits for the second quarter and pointed to a “moderation” in leisure travel growth.
August: Choice Publicly Says Its Hungry for Mergers
Choice Hotels executives stated during an earnings call they are open to pursuing mergers and acquisitions to expand their hotel empire.
“We’re always looking for M&A [mergers and acquisitions] that fits the 2 litmus tests that we talked about, improving the ROI [return on investment] for the owners and growing the brands for the shareholders,” said Pacious during a conference call.
On August 21, Choice submitted a third written offer, increasing the price to $90 per share.
Wyndham said Tuesday it rejected the third offer with the conclusion that “the proposal continues to substantially undervalue Wyndham relative to future growth prospects” and involves “business and execution risks” to Wyndham’s shareholders.
September: Talks Break Down
Choice and Wyndham continued to discuss the offer. On September 3, Wyndham’s chairman spoke with Choice’s chairman.
Choice executives thought Wyndham was going to accept the offer. “In early September, we thought we had sort of a really close agreement on the terms and the consideration and the price,” said Pacious on CNBC.
In the subsequent weeks, Wyndham’s lawyers held multiple conversations with Choice’s.
Wyndham said it offered to enter into a customary mutual confidentiality agreement to facilitate discussions around the deal and its related risks. Choice said it had offered to enter into a one-way, short-term non-disclosure agreement to facilitate Wyndham’s concerns.
During a follow-up call between the Board Chairs, Wyndham rejected the offer and further talks. Wyndham said Choice refused to address its regulatory and execution concerns.
October: Choice Takes Bid Public and Wyndham Rejects It
On October 17, Choice Hotels made a public bid to acquire all the outstanding shares of competitor Wyndham Hotels & Resorts at a price of $90 a share. Under the proposal, Wyndham shareholders would receive $49.50 per share and 0.324 shares of common stock per share.
In the interview on CNBC, Pacious said the deal is a “really compelling offer” for Wyndham shareholders.
On the same day, Wyndham’s board of directors responded and said it unanimously rejected Choice’s unsolicited bid.