Budget hotel operator Choice Hotels International on Tuesday launched a hostile bid for peer Wyndham Hotels & Resorts and prepared for a board battle to bring the target to the negotiating table.
Choice went public with its cash-and-stock offer for Wyndham in October, then valued at about $8 billion (€7.4 billion), in an attempt to combine two of the biggest US budget hotel operators.
Wyndham has said the offer undervalues its business and has raised US antitrust scrutiny concerns. It also highlighted the high debt level the combined company would have, as well as the slower growth prospects of Choice's business.
'Negotiating Table'
"There is potential for additional value to be unlocked if Wyndham were to return to the negotiating table and provide due diligence," Choice Hotels CEO Patrick Pacious said in a statement.
Wyndham was not immediately available for comment on Tuesday. Reuters in November reported that Choice was preparing to challenge Wyndham's board.
Wyndham's shares were up 3.69% at $82.13 before the bell as Choice also disclosed a $110 million (€102 million) stake in the company.
High Inflation
Choice's initial offer amounted to $90 per share. It is now worth $86.37 per share, or about $7.2 billion (€6.67 billion), following a decline in Choice's stock.
The bid comes when domestic travel is under pressure from high inflation, likely fueling demand for budget hotels from travelers looking for cheaper options.
Federal Trade Commission
Choice said it was filing notification and report forms with the Federal Trade Commission to begin the regulatory review process.
If the transaction takes longer than a year to complete, Wyndham shareholders are entitled to a $38 million (€35.2 million) per month regulatory ticking fee, after the one-year anniversary of the signing of definitive agreements, Choice said.
The company said it was identifying director candidates for nomination to Wyndham's board at its 2024 annual meeting.
