Wyndham comes out swinging against ‘desperate grab’ takeover offer from Choice Hotels
When you grow up in the South like I did, you learn there's a difference between mad and spittin' mad.
Wyndham Hotels & Resorts leadership appeared to be the latter in response to repeated advances by Choice Hotels for a nearly $8 billion takeover.
Don't try to buy us just because you need to distract from your sub-standard organic growth, Wyndham leaders conveyed about Choice Hotels on a third-quarter investor call Thursday.
"With no organic growth, a less vibrant loyalty program, and virtually no international capabilities in Choice's platform, we are frankly not surprised," Stephen Holmes, chairman of the board of directors at Wyndham, said at the top of the call. "Our business offers a medicine cabinet full of remedies."
The chairman's comments followed an early morning memo Wyndham sent rebuffing what it labeled Choice's unsolicited offer. Choice leadership issued multiple public releases this month defending their proposed $7.8 billion takeover. Wyndham leadership claims they are uninterested in a deal for a variety of reasons, including an uncertain regulatory timeline for approval, Choice undervaluing Wyndham and what it claims is a slower-growing business on Choice's end.
"I used to always say ... that I don't comment on [mergers and acquisitions] rumors because that used to be what always came up. But this one is not a rumor, and it also is not really M&A," Holmes told an investor analyst on the call. "It seems like a desperate grab to try to solve problems that [Choice Hotels] has."
Wyndham previously tried to buy Choice Hotels
Holmes noted capital markets and Wyndham franchisees don't like the idea of a deal passing the finish line. As of early Thursday afternoon, Wyndham's stock price was up nearly 4% for the month.
However, the Wyndham chairman indicated a prior deal attempt — with Wyndham in the acquirer's chair two decades ago — might be guiding the antipathy for Choice.
"I never talked about it because it's not appropriate, but we negotiated a deal. The capital markets turned on us, and the credit was not available to make an all-cash offer, which is what was desired from the other side," Holmes said. "We disengaged … I've never walked away from a deal before. I've done 40-plus deals, but this one just isn't going to work because the capital markets aren't attractive."
TPG reached out to Choice Hotels for comment but did not hear back in time for publication.
The pros and cons of making a deal
There are several aspects of the potential Wyndham and Choice marriage that make sense. It combines the two key players in the budget and midscale hotel sector, a segment that is beginning to catch the attention of heavy hitters like Marriott International, Hilton, IHG Hotels & Resorts and Hyatt.
A combined juggernaut like Choice-Wyndham could better compete against the growing competition with a sizable loyalty program, buying power for hotel owners and network reach. However, Wyndham CEO Geoff Ballotti indicated Choice Hotels, which acquired Radisson's Americas operation last year, has no interest in the economy hotel segment and instead wants to focus on higher tier segments of the market.
This has owners of Wyndham's new Echo Suites brand concerned.
"Certainly, questions and concerns come up longer term as developers who have not yet broken ground are wondering are they building an Echo Suites by Wyndham extended-stay economy brand for Wyndham, or are they building it for Choice," Ballotti said on the call. "That's certainly what we're concerned about."
If hotel owners start peeling away from the combined company, what's the point of a takeover? It certainly wouldn't leave loyal customers with the greater number of hotel options touted by Choice.
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- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
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| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 3X | Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com. |
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You may be eligible for as high as 100,000 Membership Rewards® Points after spending $6,000 in eligible purchases on your new Card in your first 6 months of Membership. Welcome offers vary and you may not be eligible for an offer.As High As 100,000 points. Find Out Your Offer.Annual Fee
$325Recommended Credit
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Why We Chose It
There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.