A bid by Choice Hotels International to buy rival hotel brand company Wyndham Hotels & Resorts became more heated this past week as Wyndham executives appeared to slam the door on a deal in colorful terms.
During a call with investors and analysts, Wyndham Chairman Stephen Holmes pulled no punches in his refutation of Choice's overtures. He called the move "a desperate grab" by Choice to try to solve problems that include a lack of organic growth by the brand. Holmes also said Choice wanted to make Wyndham "an elixir" for those problems.
Choice publicly aired its intentions Oct. 17, stating Wyndham walked away from talks that had culminated in an offer of $90 per share, for a total consideration of $9.8 billion — $7.8 billion in combined cash and stock and $2 billion in assumed debt. Wyndham quickly responded with its own statement that its board considered the offer "underwhelming," with too much risk and not enough value for its franchisees and stakeholders.
As Choice called for a return to the negotiating table, Wyndham executives laid out in candid detail their reasoning for rejecting the proposed acquisition. The Wyndham chairman's strong response to make clear to all his company's concerns has made him Person of the Week.
WHO: Stephen P. Holmes, non-executive chairman, Wyndham Hotels & Resorts.
STREET CRED: Holmes has been with Wyndham since 2006, previously as chairman and CEO of Wyndham Worldwide, which in 2018 split into two companies — Wyndham Hotels & Resorts and the vacation timeshare rental firm Wyndham Destinations. Wyndham Destinations is now Travel + Leisure after it was acquired in 2021 by Meredith Corp., also known as Dotdash Meredith.
WHAT HAPPENED? Joining his first earnings call with analysts in six years, Holmes took the lead in laying out Wyndham's reasons for rejecting a bid by Choice Hotels International to acquire the company. Ahead of the call, Wyndham released a 30-page presentation outlining that same reasoning. Choice also issued a statement calling on Wyndham executives to return to negotiations over the same offer it publicly announced Oct. 17.
WHAT HOLMES SAID: Holmes had a lot to say about Choice's bid, and how it its competitor has been pursuing it. "It's not attractive what [Choice] is doing. ... I don't think it's very friendly. If you want a friendly deal done, you don't approach it the way they've approached it," Holmes said. "God only knows how they can get a deal through the FTC where we are not a willing participant." He added that "we are frankly not surprised. Our business offers a medicine cabinet full of remedies," for Wyndham, he said. Holmes added that Wyndham wasn't looking to sell: "Their plan seems to be to put out repetitive press releases and see if they can turn the water enough to make it interesting for us. I just don't see that as a plan. That's a bit of a desperate plan."
HOW OTHERS RESPONDED: In a company statement, Choice Hotels International President & CEO Pat Pacious said: "Through our conversations with these stakeholders, we are encouraged by their clear understanding of the natural fit of the two businesses and belief in the combined company's ability to drive greater shareholder returns, franchisee profitability, and strategic benefits. They, and others, share our perspective that a transaction is pro-competitive, has a clear path to completion, and creates a combined company with a strong free cash flow profile to support both rapid deleveraging and investments for growth.
"We respect Wyndham's desire to achieve the best outcome for its shareholders, but that can't happen if Wyndham unilaterally ends our discussions."
WHAT'S NEXT? "It's very hard for us to say what's next," Holmes said. "The ball is really in their court." Holmes, however, left the door open for other merger and acquisition talks. "If anybody had a great idea that they want to bring to the table, we're all ears," he said.
Editor's Note: CoStar News' Person of the Week feature highlights someone whose actions, statements or issues affected the commercial real estate industry. If you'd like to nominate someone for consideration, please email news@costar.com.