Board Unanimously Recommends
Wyndham Shareholders NOT Tender Shares
Choice Ignores
Significant Regulatory and Business Risks and Misleads
Wyndham Shareholders and Other Stakeholders with
Continued Inconsistent and Inaccurate Statements
Wyndham Board Believes the Company Can Deliver Long-Term
Shareholder Value in Excess of the Current
$85 Per Share in Cash and Stock
Offered by Choice
Visit
StayWyndham.com, Where Shareholders and Franchisees Can Get the Facts
PARSIPPANY, N.J.,
Dec. 18,
2023 /PRNewswire/ --
Wyndham Hotels & Resorts
(NYSE: WH) ("Wyndham" or the "Company"), today
announced that its Board of Directors, following a comprehensive
review with its outside financial and legal advisors, has
unanimously determined the unsolicited exchange offer (the "Offer")
from Choice Hotels International, Inc. (NYSE: CHH) ("Choice") to
acquire all outstanding shares of Wyndham is NOT in the best
interests of Wyndham and its shareholders. The Wyndham Board of
Directors unanimously recommends that shareholders NOT tender any
of their shares into the Offer.
"Choice has, once again, failed to address the major value gap
and risks of their offer – which remains virtually unchanged from
the terms outlined in their previous unsolicited proposal," said
Stephen P. Holmes, Chairman of the
Board. "The core issues we have articulated remain the same: a
likely prolonged regulatory review period of up to 24 months with
an uncertain outcome; the pure inadequacy of the Offer from a
valuation standpoint, including the significant equity component of
Choice stock; and the lack of consideration for Wyndham's
superior, standalone growth prospects."
Holmes continued, "Our Board has
made itself consistently clear on these
risks, but Choice continues to ignore what is in the best
interests of Wyndham shareholders by repeatedly proposing illusory
and unrealistic offers while making inconsistent and misleading
public statements. We are confident
Wyndham can deliver long-term shareholder value
well in excess of the $85 per share
offered by Choice by continuing to execute on our
existing business plan. The Board is steadfast in our
recommendation that shareholders not tender their shares into this
offer, and we remain fully committed to acting in the best
interests of all Wyndham shareholders."
The Company unveiled a presentation detailing the unprecedented
antitrust risks this offer presents. The presentation is available
on StayWyndham.com.
Wyndham's Board of Directors conducted a comprehensive review of
the Offer and recommends shareholders reject the Offer for the
following reasons:
- The Offer involves an uncertain regulatory timeline and
outcome and does not provide sufficient protections and
compensation for the asymmetrical risks Wyndham shareholders
would face.
- Choice's Offer would create the largest U.S. provider of hotel
franchise services in the chainscales that serve middle-income
guests - economy and midscale - with over 55% market share in each,
resulting in significant uncertainty as to whether the FTC or
courts would ever clear the transaction.
- This complex merger would require an extended period of time to
review relative to businesses that are smaller in scope, scale, or
competitive intensity.
- The FTC opened a preliminary investigation into the transaction
– even before there was an exchange offer or transaction –
additional evidence of antitrust concerns and a potential prolonged
review process.
- Any extended period between the announcement and closing (or
termination) of the transaction exposes Wyndham and its
shareholders to meaningful risks, including:
- New business development disruption and deterioration in
segment-leading retention rates resulting in impaired earnings
growth;
- Competitors (including Choice) capitalizing on franchisee
uncertainty;
- Stagnated development of Wyndham's fast-growing ECHO Suites
brand; and
- Increased employee turnover and reduced ability to attract and
retain team members.
- Franchisees have vehemently expressed their opposition to a
proposed transaction, which heightens the level of business risk
and FTC scrutiny.
- The reception from franchisees has been extremely
negative.
- AAHOA, which represents roughly
two-thirds of Wyndham and Choice franchisees, has
been strongly opposed to a potential combination, noting that
having one franchisor control so many economy and midscale hotels
would be "highly disruptive."
- The
Wyndham Board is concerned that the announcement of a transaction could
result in increased franchisee churn and reduced new development
activity.
- Choice's public offer in October has amplified the antitrust
risk across the franchisee community and with the FTC. As a result,
it has become apparent that the risk and the potential damage
to Wyndham and its shareholders would be overwhelming.
- The Offer is inadequate and undervalues Wyndham's superior,
standalone growth prospects.
- The Wyndham Board believes the Company can deliver long-term
shareholder value in excess of the $85 per share offered by Choice by continuing to
execute on its existing business plan.
- Wyndham has significant embedded upside from its ongoing
retention strategy.
- The attractive mix of Wyndham's record pipeline provides
additional opportunity for accelerated net room growth,
above-market RevPAR growth and royalty rate expansion.
- Wyndham's geographic domestic footprint is best positioned to
capture unprecedented hotel demand in markets receiving the largest
allocation of the Federal Government's $1.5
trillion Infrastructure Bill.
- Wyndham has launched the fastest-growing brand in the industry,
ECHO Suites Extended Stay by Wyndham, appealing to this
infrastructure demand.
- Wyndham expects to benefit from ancillary revenue growth
including new credit card products, new strategic marketing
partnerships and other monetization opportunities.
- Choice's Offer mischaracterizes Wyndham's growth
potential.
-
- Choice portrays Wyndham's growth potential as $9 per share, which is an egregious
mischaracterization and fails to reflect the outlook Wyndham
provided in its October investor presentation, which provides the
roadmap for an incremental $20 per
share from EBITDA growth potential over the next two years with an
additional $16 per share from the
deployment of available capital during that period.
- Importantly this standalone plan does not rely on
overleveraging Wyndham's balance sheet. Rather, Wyndham's plan can
be achieved with leverage remaining in the lower half of Wyndham's
stated target range at 3.5x.
- Additionally, there is further upside from continued multiple
expansion. Since completing its spin-off in 2018, Wyndham's
multiple has expanded and continues to close the gap to its peer
set average, which currently stands at 15.7 times. Every 1.0x
multiple increase could translate into as much as $8 per share of additional value.
- The Offer represents a mere 4% premium to Wyndham's
52-week high and a 10% premium to Wyndham's current stock price (as
of December 15, 2023).
- Importantly, since the announcement of Choice's proposal on
October 17, 2023, Wyndham's
share price has recovered to 95% of its 52-week high, which is
generally consistent with the broader lodging sector performance of
99%.
- Choice's proposed "ticking fee" is illusory as crafted.
- Choice's stock is at significant risk for further price
degradation, with a slower-growing business. Post-transaction,
Choice's leverage level would surpass all other lodging peers'
average leverage ratios – negatively affecting not only the value
of the equity consideration in the Offer, but also limiting
Choice's ability to invest in future growth.
- The
Wyndham Board sees the Offer as an attempt by Choice to mask its anemic organic
growth by acquiring Wyndham's global system and capabilities
without paying adequate consideration for it to Wyndham
shareholders.
- The 45% stock component is subject to volatility and exposes
Wyndham shareholders to excessive risks with respect to the value
of the consideration received. Choice stock has already dropped by
12% since its initial public offer.
- Choice's stock appears to be fully valued with significant risk
for further degradation. Approximately 70% of covering research
analysts rate Choice as a "sell" or "hold" stock. Over 90% of
covering analysts rate Wyndham as a "buy."
- The Offer is subject to a litany of conditions, which make
the consummation of the Offer highly uncertain.
- Choice has not arranged committed financing, despite "numerous
calls with potential financing sources" (according to its own
statements) for more than four months.
- The Offer includes a non-customary "Diligence Condition," which
the Wyndham Board believes is designed solely to serve as a
one-way exit option to the Offer in favor of Choice.
The basis for the Board's decision is set forth in the
Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") filed today with the U.S. Securities and Exchange
Commission.
The filing and additional materials are available at https://www.staywyndham.com/.
Advisors
Deutsche Bank Securities Inc. and PJT Partners are serving as financial advisors
and Kirkland & Ellis LLP and Arnold &
Porter Kaye Scholer LLP are legal advisors to Wyndham.
About Wyndham Hotels & Resorts
Wyndham Hotels & Resorts (NYSE: WH) is the world's largest
hotel franchising company by the number of properties, with
approximately 9,100 hotels across over 95 countries on six
continents. Through its network of approximately 858,000 rooms
appealing to the everyday traveler, Wyndham commands a leading
presence in the economy and midscale segments of the
lodging industry. The Company operates a portfolio
of 24 hotel brands, including Super 8®, Days Inn®, Ramada®,
Microtel®, La Quinta®, Baymont®, Wingate®, AmericInn®, Hawthorn
Suites®, Trademark Collection® and Wyndham®. The Company's
award-winning Wyndham Rewards loyalty program offers approximately
105 million enrolled members the opportunity to redeem points at
thousands of hotels, vacation club resorts and vacation rentals
globally. The Company may use its website as a means of disclosing
material non-public information and for complying with its
disclosure obligations under Regulation FD. Disclosures of this
nature will be included on the Company's website in the Investors
section, which can currently be
accessed at https://investor.wyndhamhotels.com.
Accordingly, investors should monitor this section of the Company's
website in addition to following the Company's press releases,
filings submitted with the Securities and Exchange Commission and
any public conference calls or webcasts.
Important Additional Information
This press release is not an offer to purchase or a solicitation
of an offer to sell any securities or the solicitation of any
vote or approval. Wyndham Hotels & Resorts, Inc.
("Wyndham" or the "Company") has filed with the U.S. Securities and
Exchange Commission (the "SEC") a solicitation/recommendation
statement on Schedule 14D-9. Any solicitation/recommendation
statement filed by the Company that is required to be mailed to
stockholders will be mailed to Company stockholders. COMPANY
STOCKHOLDERS ARE ADVISED TO READ THE COMPANY'S
SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 AND ANY
OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME
AVAILABLE BEFORE MAKING ANY DECISION WITH RESPECT TO ANY EXCHANGE
OFFER BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
Company stockholders may obtain a copy of the Solicitation/Recommendation Statement
on Schedule 14D-9, as well as any other documents filed
by the Company in connection with any exchange offer by Choice
Hotels International, Inc. or one of its affiliates,
free of charge at the SEC's website
at www.sec.gov. In addition, investors and security
holders will be able to obtain free copies of these documents from
the Company by directing a request to Matt
Capuzzi, Senior Vice President, Investor Relations at
matthew.capuzzi@wyndham.com or by calling 973.753.6453.
The Company intends to file a proxy statement and accompanying
WHITE proxy card with the SEC with respect to the Company's 2024
Annual Meeting of Stockholders (the "2024 Annual Meeting"). The
Company's stockholders are strongly encouraged to read such proxy
statement, the accompanying WHITE proxy card and other documents
filed with the SEC carefully in their entirety when they become
available because they will contain important information. The
Company's stockholders will be able to obtain any proxy statement,
any amendments or supplements to the proxy statement and other
documents filed by the Company with the SEC free of charge at the
SEC's website at www.sec.gov.
Copies will also be available free of charge
at the Company's website at
https://investor.wyndhamhotels.com.
Certain Information Concerning Participants
Wyndham and certain of its directors and executive officers may
be deemed to be participants in the solicitation of proxies under
the rules of the SEC. Information regarding the Company's directors
and officers and their respective interests in the Company by
security holdings or otherwise is available in its most recent
Annual Report on Form 10-K filed with the SEC on February 16, 2023 and its most recent definitive
Proxy Statement on Schedule 14A filed with the SEC on March 28, 2023. To the extent holdings of the
Company's securities have changed since the filing of the Company's
most recent Annual Report on Form 10-K or the Company's most recent
definitive Proxy Statement on Schedule 14A, such changes have been
reflected on Statements of Change in Ownership on Form 4 filed with
the SEC. Updated information relating to the foregoing will also be
set forth in the Company's proxy statement and other materials to
be filed with the SEC for its 2024 Annual Meeting. These documents
can be obtained free of charge from the sources indicated
above.
Cautionary Statement on Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934,
as amended, including statements related to the
offer. Wyndham claims the protection of the Safe Harbor
contained in the Private Securities Litigation Reform Act of 1995
for forward-looking statements. Forward-looking statements include
those that convey management's expectations as to the future based
on plans, estimates and projections at the time Wyndham makes the
statements and may be identified by words such as "will," "expect,"
"believe," "plan," "anticipate," "intend," "goal," "future,"
"outlook," "guidance," "target," "objective," "estimate,"
"projection" and similar words or expressions, including the
negative version of such words and expressions. Such
forward-looking statements involve known and unknown risks,
uncertainties and other factors, which may cause the actual
results, performance or achievements of Wyndham to be materially
different from any future results, performance or achievements
expressed or implied by such forward-looking statements. You are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of hereof.
Factors that could cause actual results to differ materially
from those in the forward-looking statements include, without
limitation: factors relating to the offer; general economic
conditions, including inflation, higher interest rates and
potential recessionary pressures; the effects from the coronavirus
pandemic, including the impact on Wyndham's business, as well as
the impact on its franchisees, guests and team members, the
hospitality industry and overall demand for and restrictions on
travel; the performance of the financial and credit markets; the
economic environment for the hospitality industry; operating risks
associated with the hotel franchising business; Wyndham's
relationships with franchisees; the impact of war, terrorist
activity, political instability or political strife, including the
ongoing conflicts between Russia
and Ukraine and between
Israel and Hamas; Wyndham's
ability to satisfy obligations and agreements under its outstanding
indebtedness, including the payment of principal and interest and
compliance with the covenants thereunder; risks related to
Wyndham's ability to obtain financing and the terms of such
financing, including access to liquidity and capital; and Wyndham's
ability to make or pay, plans for and the timing and amount of any
future share repurchases and/or dividends, as well as the risks
described in Wyndham's most recent Annual Report on Form 10-K
filed with the SEC and subsequent reports filed with the SEC.
Wyndham undertakes no obligation to update or revise any
forward-looking statements, whether as a result of new information,
subsequent events or otherwise, except as required by law.
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