Wyndham rejects $7.8B hostile bid from Choice Hotels

Wyndham Hotels & Resorts (NYSE:WH) has reportedly rejected a $7.8B takeover offer from Choice Hotels International (NYSE:CHH) that made early on Tuesday through a bear hug letter.

The Wall Street Journal reported that Wyndham (WH) executives said the offer undervalues the company, and the board has reservations about Choice Hotels stock, which is included as part of the buyout deal.

The two hotel companies have held ongoing talks since Choice Hotels (CHH) made its first offer in April.

Choice Hotels’ takeover offer details: The acquisition would be paid with a mix of cash and stock. Under Choice Hotels’ (CHH) proposal, the $90.00 per share to be received by Wyndham (WH) shareholders would consist of $49.50 in cash and 0.324 shares of Choice common stock for each Wyndham share they own. Choice Hotels’ (CHH) proposal was noted to represent a 26% premium to Wyndham’s 30-day volume-weighted average closing price ending on October 16, an 11% premium to Wyndham’s 52-week high, and a 30% premium to Wyndham’s latest closing price. In addition, Choice Hotels’ (CHH) proposal includes a cash or stock election mechanism, which would provide Wyndham shareholders with the ability to choose either cash, stock, or a combination of cash and stock consideration, subject to a customary proration mechanism. The proposal implies a total equity value for Wyndham of approximately $7.8B on a fully diluted basis. With the assumption of Wyndham’s net debt, the proposed transaction is valued at approximately $9.8B.

Shares of Wyndham Hotels & Resorts (WH) pared an early premarket gain of over 20% and were up 10.38% at 11:28 a.m. Choice Hotels (CHH) was down 4.70%.