Budget hotel operator Wyndham Hotels & Resorts on Monday asked its shareholders to reject Choice Hotels takeover offer, citing regulatory review of up to 24 months and lower valuation.
Last week, Choice launched a hostile bid for Wyndham after the New Jersey-based hotel repeatedly rebuffed the overtures.
Cheaper Options
"We are confident Wyndham can deliver long-term shareholder value well in excess of the $85 per share offered by Choice by continuing to execute on our existing business plan," said Stephen Holmes, chairman of the Wyndham Board.
The offer, valued at $7.8 billion (€7.14 billion) in October, comes against the backdrop of rising demand for budget hotels from travelers looking for cheaper options due to still-high inflation.
Regulatory Review Process
Wyndham also added that reception from franchisees has been extremely negative. About 80% of Wyndham franchisee respondents said a tie-up would hurt their business and about 60% said they would terminate their contract in the event of a merger if they had the option, according to a survey.
Wyndham has repeatedly highlighted that the offer undervalues its business and carries regulatory risks. It has also pointed to a combined company's likely high debt level, as well as the slower growth prospects of Choice's business.
'Negotiating Table'
Choice has also said it was identifying director candidates for nomination to Wyndham's board at its 2024 annual meeting and would file documents with the Federal Trade Commission to kick off a regulatory review process.
"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 last week.
Article by Reuters, additional reporting by Hospitality Ireland.
