Choice Hotels launches a hostile takeover bid for Wyndham

After facing repeated rejections in negotiations, Choice Hotels International is initiating a hostile takeover bid for Wyndham Hotels & Resorts.

In a statement, Choice said that it had acquired an ownership position of roughly 1.5 million shares of Wyndham stock, valued at more than $110 million. The company added that it’s currently preparing to nominate candidates to Wyndham’s board of directors and has also commenced a regulatory approval process.

“While we would have preferred to come to a negotiated agreement, the Wyndham Board’s refusal to explore a transaction has left us with no choice but to take our proposal directly to Wyndham’s shareholders,” said Choice CEO Patrick Pacious. “Wyndham chose to publicly reject our last proposal without any engagement, even after we addressed their concerns, including adding significant regulatory protections for their shareholders.”

Choice first went public with its efforts to acquire Wyndham in mid-October, with the potential transaction value pegged at around $8 billion.

• Related: Choice’s pursuit of Wyndham a rare hostile bid in hospitality

At the moment, Choice’s takeover offer remains unchanged, comprising $49.50 in cash and 0.324 shares of Choice common stock per Wyndham share. Shareholders have the flexibility to choose between cash, shares or a combination.

The offer is scheduled to expire on March 8, unless terms are extended or terminated.

As of Nov. 14, Choice had “enhanced” the proposal with various protections, including a 6% reverse termination fee that would be payable to Wyndham should the deal fail to go through.

Wyndham has repeatedly rejected Choice’s advances, however, with Wyndham chairman Stephen Holmes most recently releasing a memo criticizing Choice for continuing “to ignore our major concerns around value, consideration mix and asymmetrical risk to our shareholders, given the uncertainty around regulatory timeline.”

Other stakeholders have also expressed concern around the potential merge of the Choice and Wyndham portfolios. Earlier this fall, the Asian American Hotel Owners Association came out against the deal, warning that the combined company would “dominate the economy/limited service segment.”

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