Choice Hotels Has Talked to Investors With 40% of Wyndham Shares

Choice Hotels International’s hostile buyout offer of rival Wyndham Hotels & Resorts has entered a new phase: recriminations.

Choice Hotels said on Wednesday that institutional shareholders representing 40% of Wyndham’s total outstanding shares have talked with Choice about its recent offer to exchange their shares for Choice shares or cash.

“Since launching the exchange offer, we have engaged with dozens of Wyndham’s institutional shareholders representing over 40% of shares outstanding based on the most recently available filings,” the company said in a statement on Wednesday. “In our discussions, many shareholders have consistently expressed support for the industrial merits of a transaction as well as the desire for both parties to work together to reach an expedient resolution.”

Choice Hotels, operator of Comfort and other brands, said representatives of Wyndham contacted Choice representatives to talk about “a potential transaction and regulatory protections,” but the “good faith discussions” ended “abruptly” on December 17. 

On Monday, Wyndham’s board of directors said in a filing it opposed Choice Hotels’ unsolicited offer last week to acquire it and unanimously recommended that Wyndham stockholders reject it.

Some analysts are upbeat. JP Morgan analysts raised their rating on ChoiceHotels’ stock to “neutral” from “underweight,” partly given the stock’s pullback since announcing plans to go hostile to try to buy Wyndham. However, Skift Research believes the way the market has priced shares of Choice and Wyndham since the deal talks were disclosed suggests that a majority of investors are skeptical a deal will close.

Moelis & Company recently noted that, since 2019, there have been 98 unsolicited offers made with an enterprise value above $1 billion. Still, none of those buyout offers closed, as was first noted by Hotels Magazine.

“We remain confident we can complete the transaction within a one-year customary timeframe,” said Choice Hotels on Wednesday.