Oct. 17 (UPI) -- Shares of Wyndham Hotels & Resorts jumped more than 6% in afternoon trading on Tuesday and shares of Choice Hotels fell more than 5% after Wyhndham rejected an unsolicited $8 billion buyout offer from Choice Hotels.
Once the assumed debt is considered, the deal would have climbed to $9.8 million.
"Choice's offer is underwhelming, highly conditional and subject to significant business, regulatory and execution risk," Wyndham Chairman Stephen Holmes said in a prepared statement. "Choice has been unwilling or unable to address our concerns."
Wyndham, which operates Days Inn, La Quinta, Ramada and a host of other hotel brands, called the proposal "opportunistic" and undervalues its future growth potential. The offer was rejected unanimously by its board, the company said in the statement.
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Choice operates about 7,500 hotels in 46 countries and is trying to absorb a much larger chain in Wyndham.
The deal would represent a megamerger in the budget hotel marketplace and would bring almost 17,000 properties under the Choice roof, including familiar hotel names including Radisson, Quality Inn, Days Inn, Ramada and Travelodge.
Choice offered $90 per share, which was about a 30% premium to Monday's closing share price. That translates to $49.50 per share and 0.324 shares of Choice common stock.
The two sides had been discussing a deal for months, but Choice said Wyndham ended negotiations, which prompted Choice to make its unsolicited offer.
Holmes said the company came to the conclusion that any deal with Choice could take as long as a year to pass antitrust review, which, among other things, soured him on future negotiations.
Earlier Tuesday, Choice asked Wyndham shareholders to approve the deal after six months of contentious discussions.
"A few weeks ago, Choice and Wyndham were in a negotiable range on price and consideration, and both parties have a shared recognition of the value opportunity this potential transaction represents," Choice CEO Patrick Pacious said in a statement. "We were therefore surprised and disappointed that Wyndham decided to disengage. While we would have preferred to continue discussions with Wyndham in private, following their unwillingness to proceed, we feel there is too much value for both companies' franchisees, shareholders, associates, and guests to not continue pursuing this transaction."
Despite Wyndham's rejection, Some analysts said Choice's offer was respectable. C. Patrick Scholes of Truist Securities told clients he believes Choice is making an attractive offer to Wyndham, but Holmes, who is well-versed in mergers and acquisitions, may be "strategically holding out for a somewhat better offer from Choice or from someone else."
