Choice Hotels Puts an $8 Billion Merger Squeeze on Wyndham

Choice Hotels International went public on Tuesday with a nearly $8 billion hostile bid to acquire Wyndham Hotels and Resorts.

(Photo by Tony Webster under CC BY-SA 2.0)

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If they won’t shake hands, get ready for a bear hug.

Choice Hotels International went public on Tuesday with a nearly $8 billion hostile bid to acquire Wyndham Hotels and Resorts after much friendlier talks broke down in recent weeks.

Tender Offer

Both companies are major players in the budget hotel space — Choice owns 7,830 properties through brands like Comfort and Quality Inn, and Wyndham runs 9,100 locations at La Quinta, Super 8, and more. A merger would create the largest, low-cost hospitality franchisor in the US, with a decent foreign inventory to boot.

But getting there might be a little bit harder than Choice originally planned. The two businesses have been in private talks since April, when Choice proposed buying Wyndham for $80 a share, mostly in stock. Last month, Choice increased the offer to $85 a share and bumped up the deal’s cash portion. But Wyndham still didn’t budge, and now Choice is appealing to Wyndham’s shareholders:

  • Choice is now offering $90 a share, with about $50 in cash and the rest in stock, a 30% premium on Wyndham’s share price at Monday’s market close. Choice would also take on $2 billion of Wyndham’s debt.
  • After Choice’s bear hug letter went public Tuesday, Wyndham responded with its reasons for rejecting the offer, saying that it undervalues Wyndham’s growth potential and involves significant business and execution risks. It also questioned the value of Choice’s stock, which would make up 45% of the deal.

I’ve Been Everywhere, Man: Since the end of the pandemic, Americans have been fueled by revenge — revenge travel, that is. Once infections calmed and economies opened back up, droves of US citizens began taking trips, especially overseas. That was good news for airlines and hotels with international offerings, but not so much for the ones focused on the US. But travelers may have already had their revenge, and STR and Tourism Economics project the US hotel occupancy rate to be 63%, slightly below the 2019 rate. Dropping $8 billion for its competition seems cold, but you know what they say about how revenge is best served.