Choice Hotels drops board nominees shifts focus after Wyndham deal falls through

Monday, March 11, 2024

Choice Hotels International, Inc. (NYSE: CHH), commonly referred to as “Choice,” has announced the conclusion of its exchange offer to acquire all outstanding shares of Wyndham Hotels & Resorts, Inc. (NYSE: WH). Additionally, Choice has withdrawn its nomination of independent director candidates for Wyndham’s 2024 Annual Meeting of Stockholders. The company’s Board of Directors has approved an increase in the number of shares authorized for repurchase by five million, resulting in a total authorization of approximately 6.8 million shares when combined with the previously available shares.

In a statement released today, Choice expressed its efforts to engage in negotiations with Wyndham since April 2023, including multiple increases to the proposed offer, willingness to enhance the offer with due diligence, and offering regulatory protections above market standards. Despite significant support from Wyndham stockholders tendering into the exchange offer, Choice found it insufficient to pursue a transaction, especially considering Wyndham board’s lack of interest in a combination. As a result, Choice has decided not to extend the exchange offer and is withdrawing its slate. The company plans to focus on its standalone strategy to generate long-term value for its stakeholders.

Choice remains optimistic about its standalone strategy, which is expected to drive superior growth, with projected adjusted EBITDA increasing approximately 10% at the midpoint of guidance. Key drivers of this growth include Choice’s revenue intense strategy, realization of synergies from the Radisson Americas business integration, platform earnings potential, and international business expansion.

While Choice acknowledges progress on the regulatory front confirming the combination’s competitiveness, the offer expired on March 8, 2024, without any shares of Wyndham stock purchased. Choice decided not to accept any shares due to various factors, including Wyndham board’s unwillingness to engage in constructive discussions and unsatisfied conditions of the offer. The company has instructed the exchange agent to return all tendered shares promptly to the tendering stockholders.

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