Industry NewsChoice Exchange Offer to Acquire Wyndham Expires

Choice Exchange Offer to Acquire Wyndham Expires

Choice Hotels International‘s exchange offer to acquire the issued and outstanding shares of Wyndham Hotels & Resorts expired. Wyndham issued a letter to shareholders asking for their support of Wyndham’s nominations for their Board of Directors and issued another statement following Choice’s expiration announcement. All of the news from this morning from both companies is below:

NORTH BETHESDA, Maryland—Choice Hotels International, Inc. announced the expiration of the exchange offer to acquire all of the issued and outstanding shares of Wyndham Hotels & Resorts, Inc. The company is also withdrawing its nomination of the highly qualified, independent director candidates for election at Wyndham’s 2024 Annual Meeting of Stockholders. The company further announced that its Board of Directors 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.

The Company today issued the following statement:

“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.

Choice has a long history of delivering above-average returns, is excited by the significant runway for growth grounded in its current business strategy, and has always been disciplined in how it allocates capital. Choice’s 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 EBITDA 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.

The progress made on the regulatory front confirmed Choice’s belief that the combination is pro-competitive, and approval would have been achievable in a customary timeframe. Choice thanks the stockholders and franchisees from both companies for their significant support in this process. Choice also thanks the independent director candidates it nominated for their time, effort, and commitment to act in the best interests of the Wyndham stockholders.

The exchange offer expired on March 8, 2024. No shares of Wyndham stock were purchased by WH Acquisition Corporation, a wholly owned subsidiary of Choice, pursuant to the exchange offer. Choice decided not to accept any shares pursuant to the offer due to a number of factors, including the refusal of the Wyndham board to engage in constructive discussions on terms and the fact that a number of the conditions to the offer, such as the minimum tender condition, remained unsatisfied as of the expiration date. Choice has instructed the exchange agent for the exchange offer to promptly return all tendered shares of Wyndham stock to the tendering stockholders.”

PARSIPPANY, N.J.—Wyndham Hotels & Resorts commented on the expiration of Choice Hotels International, Inc.’s exchange offer and its decision to withdraw its slate of nominees for election to Wyndham’s Board of Directors at the 2024 Annual Meeting of Shareholders:

“The Wyndham Board is pleased that Choice has ended its hostile pursuit and proxy contest, following the expiration of its unsolicited exchange offer,” said Stephen P. Holmes, chairman of the Board. “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.”

Geoff Ballotti, president and CEO, added, “Wyndham is focused on moving ahead with the execution of our strategic plan, building on our success, and generating meaningful value. 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.”

PARSIPPANY, N.J.—The Board of Directors of Wyndham Hotels & Resorts sent a letter to shareholders urging them to protect their investment and the future of Wyndham by supporting only Wyndham’s eight highly-qualified Director nominees and not the nominees from Choice Hotels International.

Wyndham has a clear path to deliver shareholder value substantially over Choice’s offer. Wyndham’s Board has evaluated Choice’s proposal carefully and in its entirety. The Board has been clear that to make a proposal viable for shareholders, Choice must adequately address the three key issues Wyndham has repeatedly raised: insufficient valuation, unattractive consideration mix, and asymmetrical regulatory risk. Despite the company’s efforts to engage with Choice, Choice has demonstrated that it is unable, or simply unwilling, to propose a complete offer package addressing these three issues.

Wyndham’s Board believes all eight of its nominees are more qualified with the right mix of skills and highly relevant expertise—including decades of hotel franchising, international business, and public company operating experience—to oversee the execution of Wyndham’s global strategy and deliver the most value to shareholders. The Board’s Corporate Governance Committee, comprised solely of Independent Directors, conducted interviews with each of Choice’s eight nominees and determined that they lack the skills, expertise, and background in key areas critical to Wyndham’s business and have been hand-picked by Choice with the sole objective of selling Wyndham for far less than the company is worth.

The company’s definitive proxy materials will be filed and mailed soon, including the WHITE proxy card with instructions for how to vote. The vote FOR ONLY Wyndham’s eight highly-qualified Director nominees on the WHITE proxy card will be critical for our upcoming 2024 Annual Meeting of Shareholders. Wyndham’s Board also urges shareholders to discard any materials or blue proxy card they may receive from Choice.

Deutsche Bank Securities Inc. and PJT Partners are serving as financial advisors and Kirkland & Ellis LLP and Arnold & Porter Kaye Scholer LLP are legal advisors to Wyndham.