The ongoing saga of Choice Hotels’ (NYSE:CHH) hostile bid for Wyndham Hotels & Resorts (NYSE:WH) has taken another twist. Earlier this week, Wyndham’s board urged its shareholders against tendering their shares in Choice’s exchange offer. The board believes that the deal could face a prolonged regulatory review process with an uncertain outcome.
The company noted that a combined entity could command more than 55% market share in the economy and midscale hotel categories. Consequently, a clearance from regulators could be difficult to obtain. Additionally, Wyndham believes that its existing business plan can deliver higher long-term shareholder value than Choice’s $85 per share offer.
Today, Choice has urged Wyndham investors to tender their shares in its offer to “Send a clear message to Wyndham’s board.” Choice highlighted that Wyndham representatives had discussed a potential deal, but Wyndham abruptly ended those talks on December 17.
Since launching its exchange offer, Choice has engaged with Wyndham’s shareholders, representing over 40% of its outstanding shares. Choice is confident of completing the deal within a year and has already begun the regulatory process. The company “Looks forward to continuing to work closely with the FTC to support a fact-based review process.”
Choice already has a stake worth over $110 million in Wyndham, and its M & A proposal points to a 14.9x multiple for Wyndham’s estimated adjusted EBITDA for 2023.
Is Wyndham a Good Stock to Buy?
Overall, the Street has a Strong Buy consensus rating on Wyndham and the average WH price target of $88.57 implies an 11.2% potential upside. Shares of the company have surged nearly 18% over the past six months. On the other hand, Choice stock has remained essentially flat over the past year.
Read full Disclosure
