Choice Hotels has publicly announced a $7.8 billion offer for Wyndham Hotels & Resorts, following failed private discussions. The potential merger would bring together two major players in the budget hotel industry.
Initial Bid Revealed
In April, Choice Hotels made an initial bid for Wyndham, confirming a previous report by the Wall Street Journal. Discussions between the two companies have been ongoing since then.
Choice Hotels is proposing to acquire Wyndham for $90.00 per share, with $49.50 in cash and the remainder in stock. This offer represents a 30% premium over Wyndham's closing stock price of $69.10 on Monday.
Following the announcement, Choice Hotels' stock slipped more than 2% to $122.00 in premarket trading on Tuesday, while Wyndham's stock rose approximately 15%.
Choice Chief Executive Pat Pacious expressed surprise and disappointment at Wyndham's decision to disengage. He emphasized that both companies recognized the value opportunity presented by the potential transaction.
Meeting Budget Travel Demands
Both Choice Hotels and Wyndham primarily serve budget-conscious travelers. Choice Hotels, known for brands such as Quality Inn, Econo Lodge, Clarion, and Comfort, aims to expand its presence in the upper-midscale and upscale segments. Combining with Wyndham would support this strategic goal. Wyndham's portfolio includes well-known brands like Travelodge, Days Inn, and La Quinta.
Competing with Industry Giants
A merger between Choice Hotels and Wyndham would position the combined entity to compete against larger lodging rivals such as Marriott and Hilton, who cater to higher-end travelers.