Choice Hotels International is still pushing ahead in its bid to acquire Wyndham Hotels & Resorts. Today, the company issued an investor presentation and infographic disputing what it described as “false and misleading antitrust claims” made by Wyndham to the U.S. Securities and Exchange Commission. Choice's presentation has been filed with the SEC and is also available at CreateValueWithChoice.com, a website created by Choice to drive support for the deal.
“We are disappointed Wyndham is pushing this disinformation campaign,” Choice President and CEO Patrick Pacious said in a statement. “Their take on the antitrust risk on our proposed combination is misleading and further reflects the board's apparent entrenchment. Wyndham's characterization of the lodging industry's competitive landscape and relevant regulatory criteria is incorrect. Our pro-competitive combination is well positioned to obtain approval, and we remain committed to completing it for the benefit of both companies' franchisees, shareholders and guests.”
Wyndham is hinging its argument on what it calls “a manipulated version of the lodging industry” that has been “fabricated to drive unsubstantiated antitrust concerns.” Wyndham, the company argued, “arbitrarily” segments hotels based on STR chain scales, but Choice claims that STR chain scales are not meaningful under antitrust law.
According to the statement: “Wyndham overlooks that Choice and Wyndham account for only 10 percent of U.S. room revenue. Wyndham willfully ignores the intense competition between hotel brands for guests and franchisees and the fact that existing brands regularly move up and down STR chain scales. Wyndham further ignores independent hotels, which comprise approximately 45 percent of the market. Wyndham's overly narrow definition of the market is contradicted by clear legal and regulatory precedent and has already been rejected by antitrust enforcers in their approval of the Marriott-Starwood combination.”
Choice also noted nine other major competitors—including Marriott, Hilton and IHG—with which both Wyndham and Choice already compete, and argued that a combined company would be better poised to capture market share from these businesses. Beyond competing with other companies, Choice argued that franchisees of a united Choice and Wyndham would be able to take on online travel agencies, which it said make up more than half of online hotel bookings and have a marketing spend that is 10 times larger than Choice and Wyndham combined.
The company is “making progress” on the regulatory process with the U.S. Federal Trade Commission, and expects to continue cooperating with the FTC during the Second Request process, which is likely to begin on Jan. 11. “Choice remains confident that it can complete the combination within a one-year customary timeframe,” the statement claimed.
In December, Wyndham's board of directors “unanimously determined” that Choice’s unsolicited exchange offer to acquire all outstanding shares of Wyndham was not in the best interests of the company and urged shareholders not tender any of their shares into the offer. Wyndham also created its own website, StayWyndham.com, to outline its reasons for remaining independent. In January, Wyndham filed "The Real Antitrust Story" with the SEC, a timeline of the negotiations and outline of what the board of directors describes as "significant risks" involved in the deal.
Moelis & Company, Goldman Sachs & Co. and Wells Fargo are financial advisors to Choice and Willkie Farr & Gallagher LLP and Axinn, Veltrop & Harkrider are serving as legal advisors.