PARSIPPANY, New Jersey—Wyndham Hotels & Resorts announced that its Board of Directors received a letter from Choice Hotels International, Inc. on November 14, 2023. Wyndham’s Board of Directors, together with its financial and legal advisors, closely reviewed Choice’s letter and determined that it represents a step backward and that the terms Choice outlined are not in the best interests of Wyndham or its shareholders. Wyndham responded to Choice in a letter dated November 21, 2023, included below.
Choice’s first communication in a month since its public disclosure of its unsolicited proposal contains no change to the form of consideration and undervalues Wyndham’s standalone growth prospects. At Choice’s current share price, its offer to acquire all outstanding shares of Wyndham stands at a value of $86 per share, below the nominal value of $90 per share proposed on October 17, 2023, the date of Choice’s public disclosure. The letter proposes two years for Choice to seek to obtain regulatory approvals supported only by a low 6 percent reverse termination fee, which would both create a prolonged period of limbo and expose Wyndham and its shareholders to asymmetrical risk.
Stephen P. Holmes, chairman of the Wyndham Board of Directors, said, “Choice continues to ignore our major concerns around value, consideration mix, and asymmetrical risk to our shareholders given the uncertainty around regulatory timeline and outcome. In addition, Choice’s existing proposal is valued at $86 per share, lower than the unsolicited public proposal of $90 per share they made a month ago. Given they now explicitly acknowledge the legitimate issues around the regulatory timeline, they are essentially asking our shareholders to take on serious risk and accept as compensation for a failed deal a low reverse termination fee that doesn’t even begin to compensate for the potential lost earnings and long-term impairment to value that could occur during an uncertain two-year regulatory review. In line with our fiduciary duties, we will of course always evaluate any serious proposal, but Choice continues to fail to adequately address any of the three core issues we have repeatedly raised. They have instead chosen to prolong this for months with a proposal that remains unfeasible, damaging to our business, and unnecessarily distracting to our management team.”