Choice Hotels International is making efforts to nominate directors to Wyndham Hotels & Resorts’ board in an attempt to end the deadlock in an $8bn takeover tussle, reported Reuters, citing people familiar with the matter.
Choice has bought shares of Wyndham in the open market and intends to increase its interest in the days to come, the sources added.
This move would enable Choice to nominate directors to Wyndham's board in January next year.
In case Wyndham continues to reject the acquisition offer, Choice could choose the mode of the election of directors at the former’s annual shareholder meeting to be held in the spring into a referendum, which leaves scope for investors to decide whether merger talks should take place or not, the sources said.
Choice has begun the process of interviewing potential nominees, the sources added.
The hotel is also preparing to roll out a tender offer for Wyndham's shares that would indicate to the latter’s investors that there is a firm offer, according to the sources.
The merger, if it materialises, could combine two of the biggest budget hotel operators in the US.
Wyndham has repeatedly rejected Choice’s offers and has not agreed to the two parties engaging in mutual due diligence, the sources said.
According to sources, Choice may drop its plans to nominate directors if Wyndham takes a decision on negotiating a deal, the sources added, requesting anonymity.
The sources added that Wyndham would be open to negotiate with Choice and signing a confidentially agreement in case all its merger concerns are addressed.
Last week, Wyndham stated that Choice's latest revised bid undervalued its business.
Wyndham’s concerns were about the slower growth prospects of Choice and the debt the merged entity would have following the deal.
Antitrust scrutiny from US regulatory authorities was also cited as another reason by Wyndham for rebuffing the takeover offer from Choice.
Choice, however, estimated that the merged entity would generate around $1bn of free cash flow next year, enabling it to repay debt and make investments in growth plans.
Wyndham franchises around 9,100 hotels across 95 countries, while Choice operates almost 7,500 hotels in 46 countries.
