After months of begging, pleading, and attempted strong-arming, Choice Hotels is calling off its attempt to merge with similarly-sized rival Wyndham Hotels and Resorts.
Choice, which is the parent company for the Comfort Inn, Radisson, and EconoLodge chains, among others, had previously offered $49.50 and 0.324 of its own shares for each Wyndham share it had been looking to acquire. As of Monday (Mar. 11), that tender would have been worth about $8 billion to the group behind the Days Inn, Super 8, and La Quinta Inns & Suites chains.
Ignoring the ‘Do Not Disturb’ sign
“Since beginning this process in April 2023, Choice has attempted to engage in good-faith negotiations with Wyndham through numerous different avenues,” the company wrote in a statement. It tried to raise the size of its offer, to open its books, and even to initiate regulatory scrutiny of its deal without Wyndham’s blessing. (“The [U.S. Federal Trade Commission] reached out to Wyndham unsolicited and started investigating the deal a month before Choice launched its formal offer,” Wyndham wrote to shareholders in a letter Monday asking them to reject the deal.) Wyndham has rejected Choice’s efforts throughout the process.
A tie-up between the two companies would have carried a good bit of regulatory risk. In February, U.S. Sen. Elizabeth Warren wrote a letter to the FTC in asking it to “closely scrutinize” the deal because the combined entity would have held 57% of the market for budget hotels and 67% of the midscale market. For comparison, the since-cancelled JetBlue Airways-Spirit Airlines merger would have given those two companies control of 10% of U.S. air travel.
“Wyndham is focused on moving ahead with the execution of our strategic plan, building on our success and generating meaningful value,” said Geoff Ballotti, the company’s president and CEO, in a statement about Choice’s capitulation. “We look forward to doing so without the unnecessary distraction of this situation and disruption to our business.”
Both companies’ shares ended Monday trading higher. Choice stock gained 5.7%, and Wyndham stock rose 2.4%.