How many times can Choice court Wyndham and Wyndham's management say no? We are destined to find out through 2024. If a merger does somehow happen, Wyndham's repeated claims that the deal would face antitrust scrutiny almost invites the scrutiny.
Wyndham Hotels & Resorts‘ board of directors said in a filing on Monday it opposed Choice Hotels International’s unsolicited offer last week to acquire it, and unanimously recommended that Wyndham stockholders reject it.
Choice’s offer downplays regulatory and business risks, including a likely long and uncertain antitrust review, the board said.
“Our Board has made itself consistently clear on these risks, but Choice continues to ignore what is in the best interests of Wyndham shareholders by repeatedly proposing illusory and unrealistic offers while making inconsistent and misleading public statements,” said Stephen Holmes, chairman of the board and former CEO. “We are confident Wyndham can deliver long-term shareholder value well in excess of the $85 per share offered by Choice by continuing to execute on our existing business plan.”
Wyndham launched a website, StayWyndham.com, detailing the risks it said the offer presents. Some key points:
- Wyndham claims there is “strong, public franchisee opposition,” and it quotes Laura Lee Blake, the CEO of the Asian American Hotel Owners Association, whose members own 60% of hotels in the U.S., as saying the merger would be “really to the detriment of the franchisee hotel owners.”
- Wyndham also claims its management can deliver more value — essentially meaning eventually a higher share price on its own rather than as a merged entity. It quotes an unnamed “Wall Street Research Analyst” as saying, “We believe Wyndham is better positioned as a standalone given improving fundamentals in room growth and international opportunity.”
Choice Hotels last week offered Wyndham shareholders its own stock or cash in exchange for their shares. It claimed its deal offers a 30% premium to the value of Wyndham’s stock before it publicized its takeover offer.
The Backstory on the Choice-Wyndham Merger Talks
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Photo credit: Wyndham is the flagship brand of Wyndham Hotels and Resorts. Source: Wyndham.