Choice Hotels scraps effort to buy Wyndham Hotels after conceding a deal will not happen

By Ciara Linnane

Choice concedes a deal is not possible given the 'obvious continuing disinterest' of the Wyndham board

An earlier version of this report erroneously said the Wyndham board had refused to hold talks with Choice. The two parties did engage on a number of occasions. It has been corrected.

Choice Hotels International Inc.'s stock jumped 7.5% on Monday, after the company said it's scrapping its effort to acquire Wyndham Hotels & Resorts Inc. after conceding that a deal is not available at this time.

The North Bethesda, Md.-based hotel operator (CHH) said it's withdrawing its nomination of independent director candidates for the Wyndham (WH) board and raising its share buyback authorization by five million shares. That will boost the program to 6.8 million shares.

The two companies have been at loggerheads since Choice went hostile with its cash-and-stock bid for Wyndham in October, choosing to take the offer straight to shareholders after the Wyndham board rejected the offer. The board cited regulatory risk given the long 24-month time period it was expected to take to reach a close.

"While the support from Wyndham stockholders tendering into the exchange offer was significant considering the number of investors structurally prevented from participating at this stage, it was not sufficient for Choice to conclude-particularly when taking into account the Wyndham board's obvious continuing disinterest in a combination-that a path towards a transaction is available at this time," the company said Monday.

The exchange offer expired on Friday and Choice decided not to accept any of the tendered shares.

The company said it still believes the combination would be "pro-competitive," and that approval would have been achievable in a regular time frame.

Wyndham had countered that the offer was inferior to its own stand-alone growth prospects, and questioned the future value of Choice shares given the high level of leverage required to close a deal.

On Monday, the company welcomed Choice's decision.

"Wyndham is focused on moving ahead with the execution of our strategic plan, building on our success and generating meaningful value," the company said in a statement. "We look forward to doing so without the unnecessary distraction of this situation and disruption to our business."

Wyndham's stock was down 1.2%.

-Ciara Linnane

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03-11-24 1102ET

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