Choice launches exchange offer for Wyndham Hotels & Resorts
Choice Hotels International, Inc. has launched an exchange offer to acquire Wyndham Hotels & Resorts, Inc. in order to present its proposal directly to Wyndham shareholders.
In making the announcement, Choice said it continues to believe that a transaction with Wyndham is pro-competitive and would generate value for both Wyndham and Choice shareholders as well as deliver significant benefits to franchisees, guests and associates of both companies.
Choice also announced that it currently holds approximately 1.5 million shares of Wyndham common stock, valued in excess of $110 million and today is filing the Hart-Scott-Rodino (“HSR”) notification in order to begin the required regulatory review.
Choice’s exchange offer maintains the previously proposed offer to Wyndham, comprised of $49.50 in cash and 0.324 shares of Choice common stock per Wyndham share, representing a value of $40.50 based on Choice’s trading price as of Oct. 16, 2023, the day prior to Choice’s first public offer (the “Pre-Release Date”). As of the Pre-Release Date, the proposed offer price equates to a 30% premium to Wyndham’s closing share price of $69.10, and reflects a 14.9x multiple of Wyndham’s consensus 2023 adjusted EBITDA estimate, a forward multiple Wyndham has never achieved, absent COVID disruptions.
The exchange offer provides Wyndham shareholders the opportunity to elect to receive the consideration in all cash, all shares or a combination of cash and shares, subject to a customary proration mechanism. In addition, the exchange offer features a regulatory ticking fee of $0.45 per Wyndham share per month, equivalent to $38 million per month, accruing daily after the one-year anniversary of the date a majority of Wyndham’s shares are tendered into the offer. This additional consideration, which has been included so that Wyndham shareholders can receive benefits similar to what Choice previously offered in its November 14, 2023 proposal in the unlikely event the transaction were to take longer than 12 months to close, would be payable in cash or stock, at Choice’s election, upon Choice’s acceptance and exchange of the Wyndham shares tendered into the offer.
The exchange offer and withdrawal rights are scheduled to expire at 5:00 PM, New York City time on Friday March 8, 2024, unless the offer is extended or terminated. The exchange offer is subject to conditions, including the receipt of all required regulatory approvals. In the exchange offer, Choice is committing to take all actions required by regulators in connection with the approval of the transaction so long as such actions would not have a material adverse effect on the combined company. The full terms, conditions and other details of the exchange offer are set forth in the offering documents that Choice is filing today with the Securities and Exchange Commission.
Choice made a proposal privately to Wyndham on Nov. 14, 2023, comprised of $49.50 in cash and 0.324 shares of Choice common stock per share of Wyndham stock, and offered Wyndham two seats on the combined company’s board.
