No More Mr. Nice Guy: Choice Resorts To Hostile Takeover After Wyndham Snubs Offers

Choice Hotels is bringing out the big guns in its effort to join forces with Wyndham Hotels & Resorts, taking its proposal directly to Wyndham’s shareholders after the rival chain publicly rejected multiple attempts to reach a deal.

The offer to shareholders is the same one Choice offered to Wyndham’s management in October: $49.50 in cash and 0.324 Choice shares for each Wyndham share, The Wall Street Journal reports. The deal is worth $7.8B, or $90 per share.

Choice has also nominated a slate of directors for consideration at Wyndham’s upcoming shareholder meeting.

“While we would have preferred to come to a negotiated agreement, the Wyndham Board’s refusal to explore a transaction has left us with no choice but to take our proposal directly to Wyndham’s shareholders,” Choice CEO Patrick Pacious said in a statement published by the Associated Press.

“Wyndham chose to publicly reject our last proposal without any engagement even after we addressed their concerns, including adding significant regulatory protections for their shareholders.”

Choice has been trying to buy Wyndham since at least May. It originally offered $80 per share in cash and stock. If the two merged, their combined brands would account for about 17% of all hotel rooms in the U.S., Pacious told the WSJ.

Choice owns 22 brands and brand extensions that operate at 7,467 properties, including flags like Quality Inn, MainStay Suites, Comfort Inn, Econo Lodge and Clarion. Wyndham has 24 brands, including Super 8, La Quinta, Ramada and Days Inn, across about 9,100 properties.

Wyndham has rebuffed Choice’s offers, claiming it would saddle the company with too much debt and put its employees and franchisees in a precarious position as they wait out the regulatory approval process.

Rather than waiting on a friendly negotiation, Choice executives are prepared to file a Hart-Scott-Rodino notification to begin the merger process, the WSJ reported. The company has already met with federal regulators and says a deal can be reached within a year.

Choice previously proposed a deal that included two seats on the combined company’s board as well as a $435M fee if the merger falls through. That offer is still on the table should Wyndham choose to play ball.

Choice’s exchange offer is set to expire March 8, according to the WSJ.

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