Choice Hotels International Inc. said Wednesday that the antitrust risk that Wyndham Hotels & Resorts Inc. has claimed is a key factor in its rejection of Choice’s hostile $85-a-share takeover bid is “misleading and further reflects the board’s apparent entrenchment.”
In a presentation published Wednesday and filed with the Securities and Exchange Commission, Choice Hotels
CHH,
said it’s disappointed that Wyndham
WH,
has pushed a disinformation campaign.
“Wyndham’s characterization of the lodging industry’s competitive landscape and relevant regulatory criteria is incorrect,” Choice Hotels Chief Executive Patrick Pacious said in a statement. “Our pro-competitive combination is well positioned to obtain approval, and we remain committed to completing it for the benefit of both companies’ franchisees, shareholders and guests.”
The two companies have been at loggerheads since Choice went hostile with its cash-and-stock bid for Wyndham in October, choosing to take the offer straight to shareholders after the Wyndham board declined to hold talks. The boards have cited regulatory risk given the long 24-month time period it’s expected to take to reach a close.
In its presentation on Wednesday, Choice argued that Wyndham is disregarding the fact that the two companies account for just 10% of U.S. room revenue.
“Wyndham’s overly narrow definition of the market is contradicted by clear legal and regulatory precedent and has already been rejected by antitrust enforcers in their approval of the Marriott-Starwood combination,” said the company.
Combining Choice and Wyndham would help franchisees reduce costs, boost profitability and counteract dominant market players.
“Together, Choice and Wyndham would drive top-line growth for franchisees through increased brand marketing spend and expand customer reach with a more robust rewards program,” it said.
See also: Choice Hotels urges Wyndham shareholders to ignore board opposition and accept buyout offer
For guests, a combination would offer expanded lodging options and an improved rewards program, it added.
Despite the Wyndham board’s refusal to engage, Choice is proceeding along the expected regulatory review path and working with the U.S. Federal Trade Commission.
“Choice expects to continue cooperating with the FTC during the Second Request process, which Choice expects to commence on January 11. Choice remains confident that it can complete the combination within a one-year customary timeframe,” said the statement.
Choice Hotels stock was slightly higher premarket and has gained 1.3% over the last 12 months, while the S&P 500
SPX
has gained 21%.
