Choice Hotels Gives Up On $8B Wyndham Hostile Takeover Bid

Choice Hotels International has abandoned its efforts to acquire Wyndham Hotels & Resorts.

Choice, which had offered to pay roughly $90 per share in a hostile takeover of Wyndham, announced Monday that its offer to acquire the chain had expired and that it was withdrawing its nominations to Wyndham’s board of directors.

Choice’s retreat from the bid ends a campaign that began in April and was repeatedly rebuffed by Wyndham. The takeover bid was valued at around $8B. 

Following the offer’s expiration on March 8, Choice’s board authorized the roughly $600M buyback of five million shares of the company, bringing its total repurchase authorization to around 6.8 million shares. 

Choice said in a statement that the firm didn’t see a path to successfully acquiring the chain given what it described as Wyndham’s “refusal to constructively and substantively engage on terms” and its “obvious continuing disinterest in a combination.” 

“As such, Choice has decided not to extend the exchange offer and is withdrawing its slate,” the statement said. “Choice intends to continue focusing on its standalone strategy, which the Company is confident will create significant long-term value for its stockholders and franchisees.”

Stephen Holmes, the chairman of Wyndham's board, said in a statement that the company was “pleased that Choice has ended its hostile pursuit and proxy contest.” 

Wyndham CEO Geoff Ballotti has consistently described the takeover attempt as a distraction to the firm’s growth and described Choice’s move to nominate eight of its allies to Wyndham’s board as having “the sole purpose of advancing its inadequate, hostile and risk-laden offer,” CoStar reported last month. 

Ballotti had voiced concerns that a merger would draw costly regulatory scrutiny and said the potential deal had already drawn interest from the Federal Trade Commission along with state attorneys general in Washington, Colorado, Kansas and Vermont. 

“Wyndham is focused on moving ahead with the execution of our strategic plan, building on our success and generating meaningful value,” Ballotti said in a statement Monday. “We look forward to doing so without the unnecessary distraction of this situation and disruption to our business.”

Wyndham generated a $50M profit in the last quarter, down $6M from the same period a year earlier. While the firm said the decline was due in part to a higher tax rate, higher interest expenses and hyperinflation in Argentina, it also said the firm had borne transaction-related expenses from the unsolicited takeover bid. 

The budget hotel operator grew its total room count by 3.5% last year across 500 new hotels, pushing total revenue in the fourth quarter to $320M. The positive earnings led Wyndham’s board to approve a 9% increase to its quarterly dividend at the end of the year. 

Choice’s revenue was $1.5B in all of 2023, up 10% from a year prior, the firm announced last month.

Its net income for the year was $258.5M, a 22% decline from a year prior that the firm attributed to the integration of Radisson Hotels Americas into its brand following a 2022 acquisition, outsized gains from a hotel sale and franchise termination fees in 2022 and “due diligence and transaction pursuit costs in 2023.” 

The firm had a global pipeline of 105,000 rooms at the end of the year, up 34% from December 2022. Choice’s stock was up more than 4% to just under $126 per share in early trading Monday, while Wyndham’s stock was relatively flat, up less than 1%.