Choice Hotels International has initiated an exchange offer to acquire all outstanding shares of Wyndham Hotels & Resorts.
The company intends to directly present its proposal to shareholders of Wyndham.
Choice Hotels has disclosed that it currently has around 1.5 million Wyndham common stock shares, valued at more than $110m.
The exchange offer upholds the initial proposal to Wyndham, consisting of $49.50 in cash and 0.324 shares of Choice common stock per Wyndham share.
This represents a value of $40.50 based on the trading price of Choice as of 16 October 2023.
The proposed offer presents a 30% premium to Wyndham's $69.10 closing share price as of the day before Choice’s first public offering.
It also states that Wyndham shareholders will be entitled to a $38m per month regulatory ticking fee if the deal is not concluded within one year of the signing of definitive agreements.
Last month, Choice privately presented a proposal to Wyndham, which was publicly rejected during the same month.
In the same month, Choice Hotels revealed its plans to nominate directors to Wyndham’s board.
It had purchased shares of Wyndham in the open market with plans to increase its interest in the days to come.
Choice president and CEO Patrick Pacious said: “While we would have preferred to come to a negotiated agreement, the Wyndham board's refusal to explore a transaction has left us with no choice but to take our proposal directly to Wyndham's shareholders.
“Wyndham chose to publicly reject our last proposal without any engagement even after we addressed their concerns, including adding significant regulatory protections for their shareholders.”
Choice Hotels currently intends to initiate the regulatory review by filing the Hart-Scott-Rodino notification with the US Federal Trade Commission.
Willkie Farr & Gallagher and Axinn, Veltrop & Harkrider are serving as legal advisers while Moelis & Company, Goldman Sachs, and Wells Fargo are acting as financial advisers to Choice.
Choice Hotels operates 7,500 hotels, with 630,000 rooms across 46 countries and territories.
