Choice Hotels has made yet another, more assertive move in its hostile takeover bid of rival Wyndham. It looks like shareholders will be voting on a potential merger when they consider board elections in May.
Choice Hotels is preparing to nominate multiple directors to Wyndham Hotels & Resorts‘ board in an aggressive move to push its approximately $9.8 billion unsolicited merger bid between the two U.S.-based hotel companies.
Choice Hotels in recent weeks bought a small Wyndham stake. The company plans to buy more of its rival’s stock in the coming days, sources told Reuters.
The equity stake would give Choice the right to nominate directors for elections to be held at Wyndham’s yet-to-be-scheduled annual meeting around April or May.
Reuters reported the news on Monday. Skift contacted the companies for comment and will update this story when they respond.
Update 11 am ET: Wyndham declined to comment. A Choice Hotels spokesperson said: “We are committed to reaching a transaction with Wyndham, and we intend to pursue all paths available to us to get there.”
Investor Vote on Board to Become Merger Referendum
The move would turn shareholders’ customary annual vote on board members into a referendum on whether the two companies must re-open deal talks.
January is the deadline for nominations to Wyndham’s board. Choice Hotels could still decide not to follow through.
Choice Hotels is taking these aggressive steps because Wyndham once again on November 21 rebuffed the offer to restart merger talks.
In October, Choice publicized its $9.8 billion acquisition offer, which was based on a mix of cash and stock and the taking on of about $2 billion in debt.
Wyndham has since raised objections that Choice’s offer undervalues its company and also that it doesn’t account for potential risks to Wyndham if the deal fails to pass antitrust review, among other concerns. A merger would create the largest U.S. public hotel company in the budget and midscale sectors.
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Photo credit: A conference room at Choice Hotels' new headquarters in Rockville, Maryland. Source: Choice Hotels.