Choice Hotels (CHH) has made a takeover offer of $8 billion U.S. for rival Wyndham Resorts (WH) as the global travel industry heats up following the end of the Covid-19 pandemic.
The bid by Choice Hotels is a hostile one and was made public after Wyndham Resorts broke off negotiations between the two hotel operators.
Choice Hotels is offering $49.50 U.S. in cash and 0.324 shares of Choice common stock for each Wyndham Resorts share. The offer represents a 20% premium to Wyndham stock’s last closing price.
The proposal from Choice Hotels allows Wyndham shareholders to choose either cash, stock, or a combination of both as part of the takeover deal. The offer also proposes giving Wyndham two seats on the combined company’s board of directors.
The deal has a total value of $7.8 billion U.S. When debt is added in, the deal’s value rises to $9.8 billion U.S.
Choice Hotels first approached Wyndham Resorts about a deal in April of this year, offering $80 U.S. per share, with 40% of that cash and 60% Choice stock.
However, that offer was rejected by Wyndham Resorts, which has expressed concerns about regulatory approval of such a takeover.
Choice operates about 7,500 hotels in 46 countries worldwide. It is seeking to absorb a much larger chain in Wyndham Resorts, which operates more than 9,000 hotels under brands that include Days Inn, Howard Johnson, Ramada, Super 8, and Travelodge.
Wyndham Resort’s stock has increased 2% over the last 12 months to trade at $69.10 U.S. per share.
The stock of Choice Hotels has gained 3% in the past year and currently trades at $124.90 U.S. a share.