(Reuters) – Budget hotel operator Wyndham Hotels & Resorts on Monday asked its shareholders to reject Choice Hotels takeover offer, citing regulatory review of up to 24 months and lower valuation.
Last week, Choice launched a hostile bid for Wyndham after the New Jersey-based hotel repeatedly rebuffed the overtures.
“We are confident Wyndham can deliver long-term shareholder value well in excess of the $85 per share offered by Choice by continuing to execute on our existing business plan” said Stephen Holmes, chairman of the Wyndham Board.
The offer, valued at $7.8 billion in October, comes against the backdrop of rising demand for budget hotels from travelers looking for cheaper options due to still-high inflation.
Wyndham also added that reception from franchisees has been extremely negative. About 80% of Wyndham franchisee respondents said a tie-up would hurt their business and about 60% said they would terminate their contract in the event of a merger if they had the option, according to a survey.
Wyndham has repeatedly highlighted that the offer undervalues its business and carries regulatory risks. It has also pointed to a combined company’s likely high debt level, as well as the slower growth prospects of Choice’s business.
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Choice has also said it was identifying director candidates for nomination to Wyndham’s board at its 2024 annual meeting and would file documents with the Federal Trade Commission to kick off a regulatory review process.
(Reporting by Aishwarya Jain in Bengaluru; Editing by Sriraj Kalluvila)