New Jersey.- Wyndham Hotels & Resorts (NYSE: WH ) (“Wyndham” or the “Company”), the world’s largest hotel franchising company with approximately 9,100 hotels in more than 95 countries, today announced that its board of directors received a letter from Choice Hotels International, Inc. (NYSE: CHH) (“Choice”), on November 14, 2023. Wyndham’s board of directors, along with its financial and legal advisors, closely reviewed Choice’s letter and determined that it represents a step backward and that the terms outlined by Choice are not in the best interests of Wyndham or its shareholders. Wyndham responded to Choice in a letter dated November 21, 2023, which is included below.
Choice’s first communication in a month since public disclosure of its unsolicited proposal contains no change to the form of consideration and continues to undervalue Wyndham’s independent growth prospects. At Choice’s current stock price, its offer to acquire all of Wyndham’s outstanding shares is worth $86 per share[1]below the proposed par value of $90 per share on October 17, 2023, the date of Choice’s public disclosure. The letter proposes a two-year period for Choice to seek regulatory approvals backed only by a low 6% reverse termination fee, which would create a prolonged period of limbo and expose Wyndham and its shareholders to significant asymmetric risk.
Stephen P. Holmes, chairman of Wyndham’s board of directors, said: “Choice continues to ignore our primary concerns around value, mix considerations and asymmetric risk to our shareholders, given the uncertainty around the regulatory timeline and outcome.” . Additionally, Choice’s existing proposal is valued at $86 per share, less than the unsolicited public proposal of $90 per share they made a month ago. Since they now explicitly acknowledge the legitimate issues around the regulatory timeline, they are essentially asking our shareholders to take serious risks and accept as Compensation for a Failed Deal: a low reverse termination fee that doesn’t even begin to offset the potential loss of profits. and the long-term value impairment that could occur during an uncertain two-year regulatory review. Of course, we will always evaluate any serious proposal, but Choice continues to fail to adequately address any of the three central issues we have repeatedly raised. “Instead, they have chosen to drag this out for months with a proposal that remains unworkable, detrimental to our business, and unnecessarily distracting to our management team.”
[1] Reflects value as of 11/20/2023, assuming $49.50 in cash and 0.324 Choice shares for each Wyndham share.