The ongoing exchange offer has sparked a dispute between the two hotel giants, prompting Choice to address specific concerns raised by Wyndham.
Wyndham’s allegations questioned
Choice Hotels challenges Wyndham’s portrayal of the competitive landscape within the lodging industry, asserting that Wyndham’s characterisation raises doubts about its ability to support franchisees effectively and generate shareholder value through mergers and acquisitions (M&A).
Choice emphasises that the US Federal Trade Commission (FTC) will independently evaluate the proposed transaction’s competitive merits based on the facts, as is customary in M&A transactions.
Furthermore, Choice expresses concern that Wyndham’s attempts to involve the FTC may deprive Wyndham shareholders of meaningful benefits from the proposed merger.
If regulatory clearance is not obtained, Choice highlights the substantial break fee it has offered as a safeguard for Wyndham shareholders.
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“Lack of transparency” from Wyndham’s board
Choice Hotels accuses Wyndham of a lack of transparency in its dealings.
Following the initiation of Choice’s exchange offer on 12 December 2023, representatives from both companies engaged in discussions concerning the potential transaction and regulatory protections.
But Wyndham’s representatives abruptly terminated these discussions on 17 December 2023.
Wyndham then failed to disclose these discussions in the Schedule 14d-9 filed on 18 December, raising questions about the completeness of the information provided to shareholders.
Shareholder support for a swift resolution
Choice Hotels reveals that it has engaged with many of Wyndham’s institutional shareholders, collectively representing more than 40% of outstanding shares.
During these discussions, many shareholders expressed support for the industrial merits of the transaction and a desire for both parties to collaborate in a swift resolution.
Choice asserts its confidence in completing the transaction within the customary one-year timeframe and emphasises its commitment to moving forward with the regulatory process, having already initiated the regulatory clock.
As the dispute unfolds, the hotel industry will be closely watching developments between Choice Hotels and Wyndham Hotels & Resorts, awaiting further insights into the unfolding exchange offer controversy.