Choice Hotels International Inc. offered to buy Wyndham Hotels & Resorts Inc. in a deal that would combine large companies in the affordable hotel space with brands including Super 8 and Quality Inn.
(Bloomberg) — Choice Hotels International Inc. offered to buy Wyndham Hotels & Resorts Inc. in a deal that would combine large companies in the affordable hotel space with brands including Super 8 and Quality Inn.
Choice is offering to pay $90 a share in cash and stock, in a deal valued at about $9.8 billion including the assumption of debt, according to a statement Tuesday. The deal price is 30% above the $69.10 that Wyndham’s stock price closed at Monday, and an 11% premium to the stock’s 52-week high, according to the statement.
While the companies have discussed the potential transaction for months, Wyndham’s decision to break off negotiations prompted Choice to take its offer public, the company said.
“We have long respected Wyndham’s business and are confident that this combination would significantly accelerate both Choice’s and Wyndham’s long-term organic growth strategy,” Choice Chief Executive Officer Patrick Pacious said in the statement.
Choice made its initial proposal in April, offering to acquire Wyndham for $80 a share, according to the statement. It sweetened its bid in the weeks that followed, eventually increasing the price to $90 and bumping the cash component to 55%.
According to Choice, Wyndham acknowledged the strategic logic for combining the companies and suggested that the offer was in a “negotiable range” before breaking off talks.
A representative for Wyndham didn’t immediately respond to request for comment.
Shares in Wyndham rose as high as $85.50 in pre-market trading Tuesday, up 24% from Monday’s close. The stock pared some of those gains and was up nearly 15% at 8 a.m. in New York.
Choice shares were down 6.7%. Choice’s stock has increased 11% since the beginning of the year through Monday’s close.
Combining the two companies would create a giant player in the world of budget hotels. Wyndham operates more than 9,000 hotels across 24 brands, including Days Inn, Ramada and Super 8. Choice has about 7,500 hotels and 22 brands, including midscale, extended stay and economy offerings.
The economy hotel segment was an industry darling during the pandemic, with occupancies holding up better than higher-rated properties. Both companies are franchisors, licensing their brands to real estate investors who own and operate individual properties.
(Updates with details on negotiations starting in the fifth paragraph.)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.