Wyndham asks shareholders to reject Choice Hotels takeover
After repeated attempts to reach a deal, Choice Hotels International (CHH) launched an attempt at a hostile takeover of Wyndham Hotels & Resorts (WH) in an exchange offer with shareholders, valued at $8 billion. In response, on Monday morning Wyndham asked shareholders to reject the bid, claiming a low valuation and regulatory review of up to 24 months as reasons to reject.
Yahoo Finance anchors Seana Smith and Brad Smith break down the latest development and what it means going forward.
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Video Transcript
BRAD SMITH: The Wyndham is telling shareholders to reject a buyout from Choice Hotels today. Choice launched another hostile bid for Wyndham last week. This is just the latest unsolicited bid by Choice to take over Wyndham after it rejected several offers just this year. Choice is offering shareholders $85 per share, but Wyndham saying the deal undervalues its business and holds regulatory risks here.
Now, for any of the dealmaking that comes forward within this industry, it is going to be focused on where in this consumer environment they can bring on more capacity without having to start on new-- new build-outs, new projects, and break ground, do more construction to try and build out that capacity.
And it seems here for a lot of the shareholders, they're going to have to continue to decide is this a deal that they would like to see ultimately go through, and we'll see if Wyndham is effective in their communications to shareholders as well.
SEANA SMITH: Yeah. I don't think this is necessarily a huge surprise, given the back and forth and what we have heard from executives here over the last couple of weeks as this has all played out. But Wyndham really making the argument here, at least the board saying that they don't think it's in the best interest for their shareholders and they do believe that they can deliver better long-term shareholder value in excess of what is being offered here through this deal, the $85 per share in cash in stock that is offered by Choice.
Of course, the question also is going back to just the whole regulatory aspect of this. What exactly that would mean for competition within this space that, of course, though not brought up in this, at least for now, but Wyndham here refusing to proceed with further discussions when it comes to Choice Hotels. So we, of course, will continue to follow this story as it develops.
