Choice Hotels International is abandoning its attempted takeover of Wyndham Hotels & Resorts following the March 8 expiration of the exchange offer to acquire all of Wyndham’s issued and outstanding shares. The company is also withdrawing its nomination of the candidates for Wyndham’s Board of Directors for election at Wyndham's 2024 Annual Meeting of Stockholders.
The company issued a statement on the decision:
"Since beginning this process in April 2023, Choice has attempted to engage in good-faith negotiations with Wyndham through numerous different avenues, including increasing the proposed offer multiple times and expressing an openness to further enhancing the offer with due diligence, offering a one-way NDA to share its confidential information with Wyndham, and offering above-market regulatory protections. Given Wyndham's refusal to constructively and substantively engage on terms, Choice took the extraordinary step of launching the exchange offer to initiate the regulatory review process and engage with Wyndham stockholders. While the support from Wyndham stockholders tendering into the exchange offer was significant considering the number of investors structurally prevented from participating at this stage, it was not sufficient for Choice to conclude—particularly when taking into account the Wyndham board's obvious continuing disinterest in a combination—that a path towards a transaction is available at this time. As such, Choice has decided not to extend the exchange offer and is withdrawing its slate. 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."
Wyndham, which has publicly opposed the acquisition, issued its own statement on the end of the bid:
“The Wyndham Board is pleased that Choice has ended its hostile pursuit and proxy contest, following the expiration of its unsolicited exchange offer,” said Chairman of the Board Stephen P. Holmes. “We are confident in Wyndham’s standalone strategy and growth prospects under the leadership of our proven management team. The Board remains committed to acting in the best interests of our shareholders and driving superior long-term value creation.”
“Wyndham is focused on moving ahead with the execution of our strategic plan, building on our success and generating meaningful value," said President and CEO Geoff Ballotti. "We look forward to doing so without the unnecessary distraction of this situation and disruption to our business. We would like to thank our shareholders and franchisees for their continued support and our team members for their dedication and focus throughout this process.”
According to Reuters, shares of Wyndham fell 4.5 percent before the bell, while those of Choice were up 3 percent. Wyndham shares have gained about 10 percent since the bid was made public in October.
Choice Shares, Next Plans
Choice further announced that its own Board of Directors has approved an increase in the number of shares authorized under its share repurchase program by five million shares. When added to the remaining number of available shares previously authorized for repurchase, this results in a total authorization of approximately 6.8 million shares.
In its statement, Choice said its Board of Directors and management team are “enthusiastic about the company's go-forward strategy, which is expected to deliver another year of superior growth with projected adjusted [earnings before interest, taxes, depreciation or amortization] increasing approximately 10 percent at the midpoint of guidance, driven by:
- Choice's unique revenue intense strategy delivering accelerated unit growth and higher royalty revenue per hotel.
- Choice's continued realization of the higher-than-expected synergies resulting from the Radisson Americas business integration.
- Choice's platform earnings potential, highlighted by the significant outperformance of the co-brand credit card program launched in April.
- Choice's continued international business earnings growth and global pipeline expansion."