Choice Hotels has made no secret of its desire to acquire the Wyndham group. A merger between the world's two largest franchisors could give rise to a new global brand. all of almost the same size to that of Marriott, the world's leading hotel group with over 1.5 million rooms. Discussions between the two parties began six months ago. But back in May, the Wall Street Journalwhich revealed the information, did not rule out a more aggressive strategy if Wyndham's management did not accept the proposed merger. His hunch was right, as Choice Hotels launched a hostile takeover bid to acquire its competitor.
The American group has just announced a proposal to buy back all Wyndham shares at a price of 90 $, representing a premium of 26 % over the share price over the last thirty days and 11 % over the highest price over the last twelve months. The transaction is valued at 7.8 billion. " A few weeks ago, Choice and Wyndham were within a negotiable price and consideration range.said Patrick Pacious, CEO of Choice Hotels. We were therefore surprised and disappointed that Wyndham decided to withdraw." .
From an initial offer of 80 $ per share, Choice's offer was gradually increased over the last few weeks to 90 $, 55% in cash and 45% in Choice shares. A proposal seen as " disappointinghighly conditional and subject to significant commercial, regulatory and execution risks "by Stephen P. Holmes, Chairman of the Board of Directors of Wyndham. " Choice was unwilling or unable to respond to our concerns" These include a high estimate of the value of Choice shares and an offer that undervalues Wyndham's future growth potential.
Conversely, Patrick Pacious is convinced that " this combination will significantly accelerate the long-term organic growth strategy of Choice and Wyndham, to the benefit of all" . Franchised hoteliers would benefit from lower operating costs and a broader customer base. The two loyalty programmes combined amount to 160 million members. This is close to Marriott Bonvoy's total of 177 million members by the end of 2022.
Finally, travellers accustomed to frequenting the establishments of these groups will have at their disposal a wider range of hotelsThis is particularly true in the United States, where these two players account for almost half of all budget and mid-range hotels. With a large majority of hotels across the Atlantic but also accelerated international growthWyndham has 24 brands, including Ramada, Days Inn, Dolce, ECHOSuites and of course Wyndham and Wyndham Grand. For its part, Choice can count on 22 brands, including Comfort, Clarion and Quality, all of which are currently being refreshed in Europe (see box). It should be noted that Choice recently strengthened its mid-range and top-of-the-range offer by taking over Radisson's activities on the American continent, for 675 million dollars. Clearly, the group has no intention of stopping there.
