Wyndham Hotels Faces Hostile Takeover Campaign from Choice Hotels

After numerous failed attempts at a friendly merger, Choice Hotels has launched a hostile takeover campaign for Wyndham.

Photo of a Wyndham hotel in Las Vegas, Nevada
Photo by Harrison Keely via CC BY 4.0

Sign up for smart news, insights, and analysis on the biggest financial stories of the day.

Now Wyndham Hotels is doing it the hard way. Or maybe this is the easy way? 

On Tuesday, following numerous failed attempts to talk Wyndham into a merger, Choice Hotels – parent company of Econo Lodge, Quality Inn, and more – launched a hostile takeover campaign for its hospitality rival.

You Leave Us No Choice

In October, Choice publicized a $7.8 billion cash-and-stock offer that valued Wyndham at roughly $90 per share, or about a 30% premium of its share price at the time. Wyndham’s board rejected the deal, citing regulatory risks and a low-ball offer. Now, Choice is making the same offer — and taking it instead to Wyndham shareholders. 

In this “exchange offer,” Choice plans to nominate a slate of directors for Wyndham’s 2024 annual shareholder meeting, effectively allowing shareholders to vote for or against a takeover. Choice also is already laying the groundwork for regulatory approval, preemptively squashing Wyndham’s concerns:

  • Adding Wyndham chains like La Quinta and Travelodge would have a new-look Choice accounting for roughly 17% of all US hotel rooms. The company says that would allow it to compete more seriously with Marriott and Hilton.
  • Choice has already engaged the FTC on an antitrust review process for a deal. It’s also arguing that its hotels are operated by franchisees who are empowered to set their own prices, therefore limiting potential harm and higher prices for consumers.

“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,” Choice CEO Patrick Pacious said in a mildly ironic statement, given the name of the company he runs.

Budget Kings: Hotels have been stung pretty hard by inflation, which has fueled demand for budget hotels. That’s been relatively good news for both Wyndham and Choice, which each have a slew of budget options in their portfolios. Last year, Choice spent $675 million to acquire the Radisson chain of hotels, which we hear may or may not be reasonable.